9M 2018 Conference Call

November 13, 2018

Disclaimer

This document has been prepared by Datalogic S.p.A. (the "Company") for use during meetings with investors and financial analysts and is solely for information purposes. The information set out herein has not been verified by an independent audit company.

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	Highlights	▪ Growth continues at progressively higher rates despite seasonal effect and Forex impact
		▪ Strong new products pipeline in hand held scanners and mobile computers all equipped with wireless charging Datalogic and in 2D industrial bar code readers
	GROUP	Keeping on strengthening of commercial & R&D organizations ▪
		▪ Shift to Android Technology: Memor™ 10 mobile computer has been validated for the "Android Enterprise Recommended"
		program for rugged devices
		9M growth led by North America and APAC ▪
		▪ Manufacturing confirming strong improvement, +8.1% in Q3, driven by APAC (China & Korea + 21%)
	VERTICALS	▪ T&L strong double digits, more than doubling in NA (+117%) in Q3
		Retail: roll outs of big projects with Tier 1 clients in NA (+72%) both ▪ in FRS and mobile computers
		▪ Q3 Revenues up 5.1% to €159.1 m
		▪ Consolidating GOM improvements vs 2017, thanks to operating savings and efficiencies
	FINANCIALS	▪ Profitability almost in line with previous year despite significant investment in R&D and S&D
		Q3 Increasing investments in R&D - from 9.5% to 10.9% on ▪ revenues on Datalogic business - and in distribution
		▪ Net Cash position at €10.9 m after dividends and buyback

Market Drivers

50% of DL Division Revenues
9M 2018 Revenues €214.2 mln (+4.0% YoY, +8% ex Forex)
3Q 2018 Revenues €72.6 mln (+7% YoY, +6.9% ex Forex)
Strong growth in North America in the quarter: over 70% at constant forex led by Big projects won in the US with Tier 1 Account
Great success of our new check out retail scanner based on imaging technology on a global basis, and growth in mobility

Retail Manufacturing

30% of DL Division Revenues
9M 2018 Revenues €130.8 mln (+13.6% YoY, 15.9% ex Forex)
3Q 2018 Revenues € 40.8 mln (+8.1% YoY, 8.1% ex Forex)
Positive performance in all Geo Areas lead by China and Korea (+21%) and Latam (+25%) at constant Forex
Exceptional growth on 2D industrial bar code readers keeping worldwide leadership. China leading the pack thanks to big project in consumer electronics sector.
Great customers' feedback on the new SLS and double digit growth for our industrial bar code readers

Transport & Logistics Healthcare

12% of DL Division' Revenues
9M 2018 Revenues €50.6 mln (+24.1% YoY, 27.9% Ex Forex)
3Q 2018 Revenues €19.5 mln (+29.4% YoY, 28.8% Ex Forex)
North America more than doubling in 3Q (+117%)
Keeping on leveraging the cross selling of our new organization with large projects won on mobility
New opportunities with leading e-commerce companies next to CEP projects
3% of DL Division' Revenues
9M 2018 Revenues €13.6 mln (-36.0% YoY, -33.3% ex Forex)
3Q2018 Revenues €4.8 mln (-5.2% YoY, -5.5% ex Forex)
Still declining in 9M due to the tough comparison with 9M 2017, where major deals with 2 relevant US hospital chains occurred, but trend improving, with a sound 3Q at approx. same levels as 2017
Strong expectation to recover over following quarters thanks to the launch of dedicated products in Q4

2018 Third Quarter Product Launches

A further important step towards Android mobile operating system:

Memor™ 10 mobile computer has been validated for the Google™-led initiative "Android Enterprise Recommended" program for rugged devices.

GRYPHON GD4500 Corded version

The Gryphon™ 4500 2D series represents the premium range of hand held scanners from Datalogic. The GD4500 scanner is the desk (corded) version for general purpose applications

IMPACT 12.0 Vision Guided Solution

The latest version of the wellknown software by Datalogic for Vision Guided Robotics applications.

FALCON X4

Falcon will play in the 4 Industries. It will target warehousing and heavy duty intensive data capture applications. Available with WE and Android OS

Financials

Quarterly trend

Revenues improved quarter on quarter

	€ m	Q3 2018	Q3 2017	Var%
Revenues		159.1	151.4	5.1%
Gross Operating Margin		77.3	70.3	10.0%
	%on Revenues	48.6%	46.4%
Operating expenses		(54.5)	(47.7)	14.3%
	%on Revenues	(34.2%)	(31.5%)
EBITDA		26.7	26.1	2.4%
	Ebitda margin	16.8%	17.2%
EBIT		20.8	21.3	-2.3%
	Ebit margin	13.1%	14.1%
	Exchange Rate	1.16	1.17

Revenues up 5.1% to €159.1 mln (+4.9% at constant exchange rate)
GOM improvement thanks to mix and cost efficiencies (+ 220 bps)
Operating expenses up:
✓ R&D on revenues up from 9.0% to 10.4% (+140 bps)
✓ S&D on revenues up from 15.9% to 17.8% (+190bps)
✓ G&A improved from 6.6% to 6.0% on revenues
EBITDA margin at 16.8% from 17.2% as effect of major investments in R&D and Distribution

Improved Gross Margin to finance R&D and S&D

	9M	9M
€ m	2018	2017	Var%	▪	Revenues up 3.4% to €466.1 m (+6.9% at constant exchange rate)

Revenues	466.1	450.7	3.4%	▪	GOM showing steady improving trend at 48.6% (around +150 bps
Gross Operating Margin	226.7	212.5	6.7%		vs 9M 2017)
%on Revenues	48.6%	47.1%		▪	R&D on revenues from 8.9% to
Operating expenses	(160.3)	(145.5)	10.2%		10.1% (from 9.2% to 10.5% Datalogic Business)
%on Revenues	(34.4%)	(32.3%)		▪	S&D on revenues from 16.2% to
EBITDA	77.5	77.9	(0.5%)		17.6% (+11.9% YoY) due to strengthening of commercial
Ebitda margin	16.6%	17.3%			organization
EBIT	61.1	62.5	(2.2%)	▪	EBITDA margin at 16.6%, where improved GOM offset by higher
Ebit margin	13.1%	13.9%			R&D and distribution expenses
EBT	56.1	56.8	(1.2%)	▪	One off negative effects mainly linked to reorganization of the
Taxes	(12.5)	(11.7)	6.8%	industrial	and distribution footprint
Net Income	43.6	45.1	(3.3%)	▪	Tax rate at ~ 22%
% on Revenues	9.3%	10.0%		▪	Net income at €43.6 m down by
Exchange Rate	1.19	1.11			3.3%

(+6.9% at constant exchange rate)
GOM showing steady improving trend at 48.6% (around +150 bps vs 9M 2017)
R&D on revenues from 8.9% to 10.1% (from 9.2% to 10.5% Datalogic Business)
S&D on revenues from 16.2% to 17.6% (+11.9% YoY) due to strengthening of commercial organization
EBITDA margin at 16.6%, where improved GOM offset by higher R&D and distribution expenses
One off negative effects mainly linked to reorganization of the industrial and distribution footprint
Tax rate at ~ 22%
Net income at €43.6 m down by 3.3%

Group Revenues by country

REVENUES BY GEOGRAPHIC AREA

€ m	9M 2018	9M 2017	Var%	Var% Ex forex
EMEA	238.0	237.7	0.1%	0.8%
North America	152.6	141.2	8.1%	15.2%
Latin America	11.1	12.7	(12.3%)	(3.5%)
Asia Pacific	64.3	59.1	8.8%	13.8%
Total Revenues	466.1	450.7	3.4%	6.9%

Sound 9M growth net of forex
3Q revenues growth driven by North America at + 32%
Continuous growth in APAC (+8.8%, +13.8% net of forex) driven by China and Korea (+15.5%, +20.1% net of forex)
EMEA growth driven by Manufacturing and T&L
NA +8.1%, (+15.2,% net of forex) lead by double digit growth in T&L and Retail

Group Revenues & EBITDA by division

REVENUES BY DIVISION

€ m	9M2018	9M2017	Var%
Datalogic Business	431.1	417.7	3.2%
Solution Net Systems	22.4	19.3	16.1%
Informatics	14.6	16.4	(10.8%)
Adjustments	(2.0)	(2.7)	(25.4%)
Total Revenues	466.1	450.7	3.4%

Datalogic driven at constant forex by growth of Fixed Retail and Stationary Industrial Scanners and Safety products. The Channel (unallocated) still in negative trend due to timing of the launch of new products
Solution Net Systems strong top line growth (+16.1%, +24.2% net of forex) thanks to new projects in postal and retail industries, and sound improvement in profitability
Informatics top line still on downward trend but profitability turnaround is in place

EBITDA BY DIVISION
€ m	9M2018	9M2017
Datalogic	73.5	75.2
Solution Net Systems	3.6	2.8
Informatics	0.5	(0.1)
Total Group	77.5	77.9

EBITDA: actual vs last year

Consolidated Balance Sheet

€ m

	Dec 2017	Sep 2018		Dec 2017	Sep 2018
Total Fixed Assets	347.9	356.4	Net Financial Position	(30.1)	(10.9)
Trade receivables	85.8	90.0
% on 12m rolling sales	14.2%	14.5%
Inventories	85.9	109.1
% on 12m rolling sales	14.2%	17.6%
Trade payables	(110.3)	(115.6)	Net Equity	353.0	364.4
% on 12m rolling sales	-18.2%	-18.6%
Trade Working
Capital	61.5	83.5
% on 12m rolling sales	10.1%	13.4%
Other assets/liabilities	(86.5)	(86.4)
Net Invested Capital	322.9	353.5	Total Sources	322.9	353.5

2018 Outlook

Revenues expected to grow at higher rates in 4Q
Maintain a sound profitability through strong focus on gross operating margin improvements
Further increase R&D investments & Distribution costs to improve our coverage and boost leadership in key areas (North America, APAC, Manufacturing)
Keeping an EBITDA margin substantially in line with 2017
Maintain a Cash Generation profile from operations
Retail: improving growth rates mainly through new products and sales organization
Manufacturing: keep on steady growing in China and other main Geo Areas, backed by strong demand for automation and further investments in sales organization in key Geo areas
T&L: keep growing in main Geo Areas, through new projects and new clients' acquisition
HC: growth expectations starting from Q4
Channel: strong recovery expected through the launch of new products particularly suitable for the channel

▪ Strong pipeline of new products to be launched over next months, ramp up of new products launched in the last 12 months

Contact

IR CONTACTS

IR Manager Vincenza Colucci CDR Communication Srl Tel. +39 335 6909547 [email protected]

IR Assistant Daniela Giglioli Tel. +39 051 3147109 Fax +39 051 3147205 E-mail [email protected]

[email protected] Via Candini, 2 40012 Lippo di Calderara di Reno Bologna – Italy

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