Announcement of New Motor Product Will increase TAM by Roughly 50% – sUAS Information

Analyst: Barry M. Sine, CFA, CMT – Litchfield Hills Analysis

This week Uncommon Machines introduced an order for drone motors from Crimson Cat (RCAT – NASDAQ).
The corporate had not beforehand introduced this product, and it’s not but on the Protection Division’s
Blue Checklist of permitted drone parts for army use. With this announcement, the corporate’s whole
addressable market when it comes to introduced parts will increase by 50% and it may now present 64% of
the parts for a typical mid-sized drone, growing its TAM by roughly 50%, from $1.3 billion to $1.9 billion.

We additionally be aware that per a verify of the Blue Checklist web site, a second Uncommon Machines flight controller has now been added. Administration has additionally been quoted within the press that it has radio receiver and video receiver parts nearing introduction, which might enhance its TAM one other 30%. This would go away
the body, which is comparatively low-tech, as the one main unannounced part required to construct a drone.

The corporate has been in a position to quickly introduce new merchandise this yr as it’s working with companions to
design and manufacture the parts. For instance, Ewing Aerospace designed and manufactures its
flight controllers and the motors announcement with Crimson Cat states that the businesses will initially use a
partnered manufacturing facility. UMAC solely has 16 workers, so it’s leveraging its workforce via
efficient use of third events.

However utilizing contract producers, it may quickly ramp up manufacturing, with little price and with out the monetary danger of taking over the fastened price of constructing its personal factories. We predict it should in time have its personal inside manufacturing capabilities, however solely when it may fairly guarantee itself that these amenities might be sufficiently utilized to at the least cowl fastened overhead bills. It not too long ago introduced the rent of a producing government who labored at Tesla’s Fremont manufacturing unit throughout its manufacturing ramp.

The opposite main optimistic is that the corporate’s retail unit, Rotor Riot, can now vertically combine sourcing
parts internally and considerably increase its gross margin.

We reiterate our Purchase score and $20 12-month value goal as we see plenty of upcoming
catalysts:

1. Introduction of a radio receiver/transmitter (RX) product, additional growing its TAM.
2. Introduction of a video receiver/transmitter (VTX) product bringing its addressable market to 84%
   of the worth of constructing mid-sized drones.
3. Blue Checklist certification of its motors.
4. New clients and orders for parts.
5. This autumn earnings in late March. We search for robust retail gross sales income, based mostly the corporate’s gross sales
   promotions (eg, a $499 Professional Starter drone package) and our go to to the Rotor Riot workplaces in December.
   This autumn also needs to present some preliminary, minimal orders for parts as the corporate had
   introduced its Courageous 7 flight controller product and a serious buyer then. Our This autumn estimate calls
   for retail income of $2 million and parts income of $100k, for whole income of $2.1
   million. This may carry income for the yr to $5.7 million, forward of unfastened steerage for at the least
   $5 million.

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Feb 27, 2025 4:03 PM ET

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