H1 2018 Conference Call

August 9, 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

GROUP

VERTICALS

FINANCIALS

Best-ever Revenues despite Forex impact
Keeping on strengthening of commercial & R&D organizations
✓ hiring of skilled salespeople, in key markets and verticals
✓ Increasing investment in R&D people & projects to stay at the forefront of cutting-edge technologies
Main industries keeping on growing despite forex, whilst Channel & HC negatively affected by seasonality in the first part of the year
Manufacturing confirming strong growth, +18,6% in Q2, growing in all main geographies
T&L above 20% in both Q2 and H1, at double digits in all main geographies
Retail: double digit growth in the US in Q2, whilst projects timing is pushing a high backlog in Q3 for EMEA
H1 Revenues up 8% at constant forex to €307.0 m
Consolidating GOM improvements vs 2017, capitalizing on improvements from previous year
Increasing investments in R&D from 9.1% to 10.4% on revenues on Datalogic business - and in distribution
Net Cash position at €13.3 m after dividends and buyback

Market Drivers

H1 2018 Revenues €141.6 mln (+2.5% YoY, +8.6% ex Forex), 50% of DL Division Revenues
Double-digit growth in North America: 20% at constant forex. Steady growth in EMEA up +6% at constant Forex
Big projects won in the US with Tier 1 Account related to check out and in store applications
First roll out of our new Joya Android wireless charging mobile device
Great success of our new check out retail scanner based on imaging technology on a global basis

Retail Manufacturing

H1 2018 Revenues €90.0 mln (+16.3% YoY, 19.7% ex Forex), 32% of DL Division Revenues
Positive performance in all Geo Areas lead by China and Korea (+56%), N. America (+13% and above 25% in Q2) and EMEA (+11%) at constant Forex
China: revenues doubled compared to 2016
Top 3 customers of H1 are a leading consumer electronic company in Asia and two automotive players in Emea
Great customers' feedback on the new SLS and double digit growth for our industrial bar code readers

Transport & Logistics Healthcare

H1 2018 Revenues €31.1 mln (+21.0% YoY, 27.3% Ex Forex), 11% of DL Division' Revenues
Growing double digits in EMEA, North America, and China & Korea: +28%, +32%, and +35% at constant Forex, respectively
Growth driven by big projects award in the US and in Europe
Start leveraging the cross selling of our new organization with large projects won on mobility
New opportunities with leading e-commerce companies next to CEP
H1 2018 Revenues €8.9 mln (-45.5% YoY, 42.0% ex Forex), 3% of DL Division' Revenues
Decline in H1 due to the tough comparison with H1 2017, where major deals with 2 relevant US hospital chains occurred
Strong expectation to recover by year end and next year thanks to the launch of dedicated products in Q4

2018 Second Quarter Product Launches

LANEHAWK LH5000 – SEAHAWK

Suited for Retailers that use shopping carts with bottom shelfs for storing Bottom-Of-Basket (BOB) items.

SG4 FIELDBUS - ADVANCED MODEL

The main applications in Manufacturing are robot cells, machinery with vertical openings, possibily with passage of material

Android 7.1 is now loaded on all Joya Touch A6 devices shipping from Datalogic starting mid-May, 2018.

STAR DONGLE – BOBTAIL

The compact size receiver allowing the communication of a PowerScan™ PM9X00 with any host equipped with a USB port

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

SOTI MOBICONTROL ENTERPRISE MOBILITY MANAGEMENT

An enterprise mobility management solution that controls all aspects of business mobility - tracking physical assets, managing applications and content, as well as keeping devices and data safe and secure

Financials

Quarterly trend

Increased Investment in R&D and Distribution

	€ m	Q2 2018	Q2 2017	Var%
Revenues		164.1	157.8	4.0%
Gross Operating Margin		79.6	76.1	4.6%
	%on Revenues	48.5%	48.2%
Operating expenses		(54.5)	(48.4)	12.6%
	%on Revenues	(33.2%)	(30.7%)
EBITDA		28.9	31.1	-7.0%
	Ebitda margin	17.6%	19.7%
EBIT		23.8	25.9	-8.4%
	Ebit margin	14.5%	16.4%
	Exchange Rate	1.1927	1.1003

Revenues up 4.0% to €164.1 mln despite the unfavorable forex (+8.1% at constant exchange rate)
GOM improvement thanks to mix and cost efficiencies (+ 30 bps)
Operating expenses up:
✓ R&D on revenues up from 8.3% to 9.7% (+140 bps)
✓ S&D on revenues up from 15.6% to 16.9% (+130bps)
✓ G&A substantially in line at 6.6% on revenues
EBITDA margin at 17.6% from 19.7% due to exceptionally low R&D and S&D expenses in Q2 '17

Investing R&D and S&D, whilst maintaining sound profitability

	€ m	1H2018	1H2017	Var%	▪	Revenues up 2.6% to €307.0 m (+7.9% at constant exchange rate)
Revenues		307.0	299.3	2.6%	▪	GOM showing steady improving
Gross Operating Margin		149.4	142.3	5.1%		trend at 48.7% (around +120 bps vs 1H 2017)
	%on Revenues	48.7%	47.5%		▪	R&D on revenues from 8.8% to
Operating expenses		(105.9)	(97.8)	8.3%		9.9% (from 9.1% to 10.4% Datalogic Business)
	%on Revenues	(34.5%)	(32.7%)		▪	S&D on revenues from 16.4% to
EBITDA		50.8	51.8	(1.9%)		17.4% (+9.1% YoY) due to strengthening of commercial
	Ebitda margin	16.6%	17.3%			organization
EBIT		40.3	41.2	(2.2%)	▪	EBITDA margin at 16.6%, where improved GOM offset by higher
	Ebit margin	13.1%	13.8%			R&D and distribution expenses
EBT		37.2	37.2	0.0%	▪	One off positive effects on financial expenses more than
Taxes		(8.2)	(7.9)	4.2%		offsetting negative forex in financial charges
Net Income		29.0	29.3	(1.1%)	▪	Tax rate at ~ 22%
	% on Revenues	9.4%	9.8%		▪	Net income at €29.0 m almost in
	Exchange Rate	1.2104	1.0830			line with 1H 2017

(+7.9% at constant exchange rate)
GOM showing steady improving trend at 48.7% (around +120 bps vs 1H 2017)
R&D on revenues from 8.8% to 9.9% (from 9.1% to 10.4% Datalogic Business)
S&D on revenues from 16.4% to 17.4% (+9.1% 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 positive effects on financial expenses more than offsetting negative forex in financial charges
Tax rate at ~ 22%
Net income at €29.0 m almost in line with 1H 2017

Group Revenues by country

REVENUES BY GEOGRAPHIC AREA

€ m	H1 2018	H1 2017	Var%	Var% Ex forex
EMEA	164.5	158.7	3.7%	4.8%
North America	91.8	95.0	(3.4%)	7.7%
Latin America	6.6	7.3	(10.6%)	0.9%
Asia Pacific	44.2	38.3	15.4%	22.9%
Total Revenues	307.0	299.3	2.6%	7.9%

Sound growth net of forex
Continuous growth in APAC driven by China and Korea (+27.3 and +34.3% net of forex)
Keeping on growing in EMEA in all the main verticals
NA positive net of forex, lead by double digit growth in T&L, Manufacturing and Retail
Strong performance of Solution Net Systems, whilst Informatics still negative
Latam slightly positive net of forex

Group Revenues & EBITDA by division

REVENUES BY DIVISION

€ m	1H2018	1H2017	Var%
Datalogic Business	284.3	279.2	1.8%
Solution Net Systems	14.2	10.6	34.5%
Informatics	9.7	11.2	(13.3%)
Adjustments	(1.3)	(1.7)	24.3%
Total Revenues	307.0	299.3	2.6%

Datalogic driven at constant forex by growth of Fixed Retail and Stationary Industrial Scanners and Safety products, Scan Engines
Solution Net Systems strong top line growth (+34.5%) thanks to new projects in postal and retail industries, and sound improvement in profitability
Informatics top line still on downward trend but profitability turnaround continuing

		EBITDA BY DIVISION
	€ m	1H2018	1H2017
Datalogic		48.7	51.3
Solution Net Systems		1.9	0.8
Informatics		0.3	(0.3)
Total Group		50.8	51.8

Consolidated Balance Sheet

€ m

	Dec 2017	Jun 2018		Dec 2017	Jun 2018
Total Fixed Assets	347.9	351.3	Net Financial Position	(30.1)	(13.3)
Trade receivables	85.8	95.9
% on 12m rolling sales	14.2%	15.6%
Inventories	85.9	102.3
% on 12m rolling sales	14.2%	16.7%
Trade payables	(110.3)	(126.1)	Net Equity	353.0	348.2
% on 12m rolling sales	-18.2%	-20.6%
Trade Working
Capital	61.5	72.0
% on 12m rolling sales	10.1%	11.7%
Other assets/liabilities	(86.5)	(88.4)
Net Invested Capital	322.9	334.9	Total Sources	322.9	334.9

2018 Outlook

Grow in revenues at mid to high single digit rates
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 in all main geographies mainly through new products and expanding 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 mostly skewed toward H2
Channel: strong recovery expected through the launch of new products particularly suitable for the channel

▪ Strong pipeline of new products to be launched in H2, ramp up of new products launched in the last 12 months in H2

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

NEXT EVENTS

September 5, 2018 Industrial Day, Borsa Italiana, Milan

October 23-24 , 2018 STAR Conference, London

November 13th, 2018 9M results

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