Datalogic — Call Transcript 2015

Nov 6, 2015

9M 2015 Conference Call

November 6th, 2015

Agenda

9M 2015

Outlook

9M 2015

Highlights 3Q 2015

Revenues	 + 15.3% YoY to 133.8 mln Euro (+5.8% at constant exchange rate) mainly thanks to North America and Asia Pacific markets in Retail and T&L  New products* accounted for 27.7% of quarterly revenues
EBITDA	 + 5.0% YoY to 18.7 mln Euro (+ 8.9% at constant exchange rate)  EBITDA margin at 14% (15.9% at constant exchange rate)
Net Profit	 Positive trend of financial costs due to refinancing  Net profit affected by timing effect of higher non recurring costs and taxes
€000		3Q2015	3Q2014	YoY%	2Q2015	QoQ %
Revenues		133,810	116,036	15.3%	135,169	(1.0%)
Gross Operating Profit		62,963	58,652	7.4%	62,687	0.4%
EBITDA		18,752	17,854	5.0%	18,636	0.6%
EBITDA Margin		14.0%	15.4%		13.8%
EBIT		13,404	13,698	(2.1%)	13,900	(3.6%)
Net Profit		8,972	10,436	(14.0%)	11,558	(22.4%)

* New products are products launched in the last 24 months

3Q 2015 New Products: ADC

Powerscan 9500 DPM-Evo Imager

Powerscan DPM family upgraded with new enhanced Datalogic DPM decoding software and new Electronics

Heron HD3430 2D area imager

The HD3430 is the first handheld reader featuring a proprietary 2D multi-purpose imaging engine

QuickScan QD2131 1D linear imager

Enhanced decoding algorithm enabling the imager to capture and decode 1D bar codes more quickly

• Extended reading range and depth of field (DOF)
• Extra-wide scan angle and extra-long scan line

3Q 2015 New Products:IA

Machine Vision P-Series – color

New P-series color smart camera, combined with Impact software 11.6

• Colour models
• Colour detection tools
• Embedded Ethernet/IP,
• Green Red Spot tool for goodread feedback

Safety and Sensors

SG4-H

The first safety light curtain with a stainless steel housing and glass window.

• High quality steel with surface roughness under 0.8 micron
• Compact form factor (50mm x 30mm profile) with no sharp edges or gaps
• No detachable labels: all information are laser marked on the housing

Machine Vision

Impact + OCR

Based on the P-Series Smart Camera, it's the first smart camera solution devoted to Optical Character Recognition.

• Dedicated User Interface for fast OCR setup
• Compact IP67 Smart Camera with rotating connectors
• Fully integrated interchangeable lenses and illuminators

Highlights 9M 2015

• Revenues growth driven by ADC in North America, Greater China and Europe thanks to robust investments by retailers and the launch of technologically advanced products
• Industrial Automation exploits growth opportunities in Asia and grows double digit in the T&L segment in North America; BU Systems still weighting on the division's results
• Revenues from Royal Mail's order to implement a new Parcel Sorting System in UK to start in 4Q.
• Investment in R&D and distribution continued to be crucial for the development of the Group
• Strong improvement of financial costs thanks to a cheaper financing contract
• Robust growth of net income

9M 2015 Profit and Loss

000€	9M2015		9M2014		Var %	Var% Net Forex Effect
Revenues	391,295	100.0%	340,064	100.0%	15.1%	5.2%
COGS	(208,546)	(53.3%)	(172,334)	(50.7%)
Gross Operating Margin	182,749	46.7%	167,730	49.3%	9.0%	3.6%
Other revenues	1,483	0.4%	1,004	0.3%
R&D	(34,764)	(8.9%)	(29,812)	(8.8%)
Distribution Costs	(74,758)	(19.1%)	(63,561)	(18.7%)
Administrative expenses	(29,056)	(7.4%)	(29,914)	-8.8%
Other operating expenses	(1,842)	(0.5%)	(1,828)	-0.5%
Total operating expenses and others	(140,420)	(35.9%)	(125,115)	(36.8%)	12.2%	3.6%
Non recurring costs/rev	(1,428)	(0.4%	(2,370)	(0.7%)
Amort. Intang. Assets from acquis.	(4,295)	(1.1%)	(4,097)	(1.2%)
Operating Profit (EBIT)	38,089	9.7%	37,152	10.9%	2.5%	9.4%
Financial (costs)/rev.	(3,910)	(1.0%)	(6,487)	(1.9%)
Foreign exchange (costs)/rev.	2,387	0.6%	910	0.3%
EBT	36,566	9.3%	31,575	9.3%	15.8%
Taxes	(6,143)	(1.6%)	(5,895)	(1.7%)
Net Income	30,423	7.8%	25,680	7.6%	18.5%
Depreciation	(5,773)	(1.5%)	(5,268)	(1.5%)
Amortization	(3,493)	(0.9%)	(3,120)	(0.9%)
EBITDA	53,078	13.6%	52,007	15.3%	2.1%	4.1%
Exchange rate	1.1144		1.3549

Revenues Trend by Division

• ADC Division is the driver of the growth in all the reference markets (+18.2%, +8.3% at constant exchange rate).
• POS check out fixed scanners with the new imaging technology and hand held scanners are driving growth in Retail
• The Industrial Automation division is catching up +8.7% (+1.2% at constant exchange rates) but net of the BU Systems, the division's revenues increased by 13.0% (+6.1% at constant exchange rates)
• T&L segment in 3Q grew double digit in North America

REVENUES BY DIVISION (%)

REVENUES BY DIVISION
€mln	9M2015	9M2014	Var %
ADC	267.7	226.5	18.2%
IA	103.4	95.1	8.7%
- IA excluding BU Systems	94.0	83.2	13.0%
Informatics	22.1	19.7	11.7%
Corporate and Adjustments	(1.9)	(1.2)	n.m.
Total revenues	391.3	340.1	15.1%

Revenues Trend by Country

REVENUES BY GEOGRAPHIC AREA
€mln	9M2015	9M2014	Var %
Europe	197.4	179.1	10.2%
North America	117.1	98.4	19.0%
Asia Pacific	52.8	39.9	32.2%
ROW	24.0	22.6	6.2%
Total Revenues	391.3	340.1	15.1%

• Europe continues to be the driver with a double digit growth both in in ADC and IA
• North America: good recovery of ADC and IA in 3Q; BU Systems still suffering mainly due to cyclical trend of Postal segment
• Expansion in Asia Pacific continues with the launch of dedicated products
• Focus on Greater China up 52.1% (35.1% at constant exchange rate), with ADC sales almost doubled
• ROW driven by South Africa and Arab Emirates (over 50% growth), Russia (over 30%) partially offset by the economic downturn in Brasil

9M Segment Reporting: GOP and EBITDA

Gross Operating Margin	9M2015	9M2014
ADC	47.4%	50.9%
Industrial Automation	45.1%	45.8%
Informatics	45.3%	45.4%
Total Group	46.7%	49.3%

EBITDA Margin	9M2015	9M2014
ADC	20.0%	20.4%
Industrial Automation	2.5%	3.3%
Informatics	1.5%	6.7%
Total Group	13.6%	15.3%

9M Segment Reporting: R&D and TWC

R&D BY DIVISION TWC BY DIVISION 34.6 26.1 3.8 (2.9) 61.5 38.1 21.4 2.8 (3.4) 58.8 ADC IA Informatics Corporate Total Group 9M2014 9M2015

R&D/Revenues	9M2015	9M2014
ADC	8.8%	9.4%
Industrial Automation	12.0%	11.4%
Informatics	3.9%	2.7%
Total Group	8.9%	8.8%

TWC/Annualized Revenues	9M2015	9M2014
ADC	10.7%	11.4%
Industrial Automation	15.5%	20.6%
Informatics	9.4%	14.3%
Total Group	11.3%	13.6%

EBITDA: Actual vs Last Year

The variance was the result of the difference between Sept'15 Actual (1.1144) and Sept '14 Actual (1.3549) €/USD exchange rate

Outlook

Outlook for 2015

• 9M results confirm the positive trend of the Group in the European and Asian Market, with first signs of recovery in US
• Positive trend in orders booking in 9M at 405.25 mln Euro, +16.3% compared to the same period of 2014.
• ADC will continue the strong performance especially in Retail
• The Industrial Automation division would benefit from revenue of projects in the Transportation, Logistics and Postal segments (contribution of Royal Mail Order) as well as the Factory Automation sector thanks to the launching of new top of the range products in Q3
• Strong investments in innovation continue, expected at over 9% on revenues

Contacts

IR CONTACTS

CFO and IR Manager Sergio Borgheresi E-mail investor@datalogic.com

IR Assistant Daniela Giglioli Tel. +39 051 3147109 Fax +39 051 3147205 E-mail daniela.giglioli@datalogic.com

Via Candini, 2 40012 Lippo di Calderara di Reno Bologna – Italy

IR Consultant Vincenza Colucci CDR Communication Srl Tel. +39 335 6909547 vincenza.colucci@cdr-communication.it www.datalogic.com

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This presentation contains statements that are neither reported financial results nor other historical information. These statements are forwardlooking statements. These forward-looking statements rely on a number of assumptions and are subject to a number of risks and uncertainties, many of which are outside the control of Datalogic S.p.A., that could cause actual results to differ materially from those expressed in or implied by such statements, such as future market conditions, currency fluctuations, the behavior of other market participants and the actions of governmental and state regulators

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Datalogic S.p.A. Via Candini, 2 40012 Lippo di Calderara di Reno Bologna – Italy Tel. +39 051 3147011 Fax +39 051 3147205 E-mail corporate@datalogic.com