Datalogic — Call Transcript 2016

Nov 11, 2016

9M 2016 Conference Call

November 11th , 2016

Agenda

9M 2016

Outlook

9M 2016

3Q 2016 Key Factors

• Continuous focus on innovation: new launches of breakthrough products in the quarter - Joya Touch and Shop Evolution 7
• Growth of Non Food Retailers in US, T&L in Europe and FA in China
• 20.4% of revenues comes from new products*
• Double digit growth in Europe both in ADC and IA
• Some impact from political uncertainties in US
• The process of reorganization of the Group by verticals Retail, T&L, Factory Automation and Healthcare – is ongoing
• Critical components Insourcing
• Finalized process of BU System spin off, executed from 1st October

* new products refer to products announced in the last 24 months

Highlights 3Q 2016

Revenues

• +4.6% YoY to 139.9 mln Euro (+4.8% at constant exchange rate) mainly thanks to Europe, both in ADC and IA, and to North and South America in ADC
• Some slowdown in result of US due to political uncertainties
• +15.6% YoY to 21.7 mln Euro thanks to strong operating cost reduction (-1.1% overall)

EBITDA

NFP

• R&D costs at 8.8% of revenues vs 8.3% in 2Q, returning back to our target
• EBITDA margin at 15.5% vs 14.0% of 3Q 2015
• Positive trend of financial costs continues
• NFP down to 37.6 mln Euro from 54.8 mln Euro at 30.09.2015

€ mln	3Q2016	3Q2015	YoY%	2Q2016	QoQ %
Revenues	139.9	133.8	4.6%	146.5	(4.5%)
Gross Operating Profit	63.5	61.3	3.5%	68.9	(7.8%)
EBITDA	21.7	18.8	15.6%	26.1	(17.0%)
EBITDA Margin	15.5%	14.0%		17.8%
EBIT	17.4	13.4	30.1%	21.1	(17.4%)
EBIT Margin	12.5%	10.0%		14.4%

3Q 2016: performance above historical

9M 2016 Profit and Loss

€ 000	9M2016		9M2015		Var %
Revenues	421,753	100.0%	391,295	100.0%	7.8%
COGS	(227,269)	(53.9%)	(208,546)	(53.3%)	9.0%
Gross Operating Margin	194,484	46.1%	182,749	46.7%	6.4%
Other Revenues	2,321	0.6%	1,483	0.4%	56.5%
R&D	(36,636)	(8.7%)	(34,764)	(8.9%)	5.4%
Distribution Costs	(74,892)	(17.8%)	(74,758)	(19.1%)	0.2%
Administrative Expenses	(27,873)	(6.6%)	(29,056)	(7.4%)	(4.1%)
Other operating expenses	(1,147)	(0.3%)	(1,842)	(0.5%)	(37.7%)
Total Operating expenses and others	(140,548)	(33.3%)	(140,420)	(35.9%)	0.1%
Non recurring costs/rev	149	0.0%	(1,428)	(0.4%)	n.a.
Amort. Intang. Assets from acquis.	(3,656)	(0.9%)	(4,295)	(1.1%)	(14.9%)
Operating Profit (EBIT)	52,750	12.5%	38,089	9.7%	38.5%
Financial (costs)/rev.	(2,603)	(0.6%)	(3,950)	(1.0%)	(34.1%)
Results from equity investments	(466)	(0.1%)	40	0.0%	n.a.
Foreign exchange (costs)/rev.	(548)	(0.1%)	2,387	0.6%	n.a.
EBT	49,133	11.6%	36,566	9.3%	34.4%
Taxes	(8,251)	(2.0%)	(6,143)	(1.6%)	34.3%
Net Income	40,882	9.7%	30,423	7.8%	34.4%
Depreciation	(6,629)	(1.6%)	(5,773)	(1.5%)	14.8%
Amortization	(3,753)	(0.9%)	(3,493)	(0.9%)	7.4%
EBITDA	66,639	15.8%	53,078	13.6%	25.5%
Exchange Rate	1.1162		1.1144

Revenues Trend by Division

ADC Division: +9.3% to 292.7 million Euro

POS check out fixed scanners with the new imaging technology is in roll out phase within major retailers

• The new DL-Axist is pushing sales of mobile computers
• The new Joya Touch and the software Shopevolution 7: successful introduction and great expectations as for custormers' feedback
• Industrial Automation division ex BU Systems: + 5.4% to 99 million Euro
• Strong growth in volume of ID and Sensors products sold, mainly thanks to Matrix family and Safety Barriers
• BU Systems, that benefits from Royal Mail order, grew by 47.2% to 13.8 million Euro

REVENUES BY DIVISION (%)

REVENUES BY DIVISION
€mln	9M 2016	9M 2015	Var %
ADC	292.7	267.7	9.3%
I A	112.9	103.4	9.2%
- IA ex BU Systems	99.1	94.0	5.4%
Informatics	18.6	22.1	(15.9%)
Corporate and Adj.	(2.4)	(1.9)	26.3%
Total Revenues	421.8	391.3	7.8%

Revenues Trend by Country

REVENUES BY GEOGRAPHIC AREA

€mln	9M 2016	9M 2015	Var %
Europe	216.2	197.4	9.5%
North America	126.4	117.1	8.0%
Asia Pacific	51.4	52.8	(2.5%)
ROW	27.8	24.0	15.5%
Total Revenues	421.8	391.3	7.8%
	ROW 7%

• Europe continues to generate robust growth in particular in IA* (+13.4%) and in ADC (+8.6%),
• North America at two speeds: double digit growth of ADC and a decrease in IA* due to a seasonality effect impacting T&L projects
• Strong growth in IA for Greater China and in ADC for Latin America

FY Segment Reporting: GOP and EBITDA

9M2015 9M2016

9M2016	9M2015	EBITDA Margin	9M2016	9M2015
46.9%	47.4%	ADC	24.6%	22.3%
44.1%	45.1%	Industrial Automation	6.2%	4.5%
48.4%	50.0%	- IA ex BU Systems	8.3%	9.0%
43.5%	45.2%	Informatics	(4.8%)	1.4%
46.1%	46.7%	Total Group	15.8%	13.6%

(*) With the purpose to better report the operating sectors economic performances, it was deemed appropriate to highlight the Divisional EBITDA as monitoring KPI.

FY Segment Reporting: R&D and TWC

€ mln € mln

R&D/Revenues	9M2016	9M2015
ADC	10.1%	8.9%
Industrial Automation	12.1%	12.0%
Informatics	5.9%	3.6%
Total Group	8.7%	8.9%

TWC/Revenues	9M2016	9M2015
ADC	12.1%	10.6%
Industrial Automation	19.3%	15.4%
Informatics	15.1%	9.4%
Total Group	13.6%	11.3%

EBITDA*: Actual vs Last Year

(*) Ordinary Operating Profit before non recurring costs/revenues and depreciation & amortization (EBITDA)

Note:

The Exchange rate variance is the result of the difference between September'16 YTD Actual (1.1162) and September'15 YTD Actual (1.1144) €/USD exchange rates.

Consolidated Balance Sheet at 30.09.2016

TOTAL ASSETS		EQUITY AND NFP
Other Assets	36.1
Trade Working Capital	76.3			111.9	Other Liability
				37.6	Net Financial Position
Total Fixed Assets	354.7			317.6	Equity

ADC new products: Mobile Computer-Store Automation

Joya Touch

Multi-purpose device for retail applications.

• Multi-purpose device: handheld or pistol-grip
• Wireless Charging Cradle
• Datalogic's SoftSpot™ Technology
• 2D imaging technology
• Easily customized in a number of ways
• Fast Charging/Large Battery
• Several application: Retail, Selfshopping, Hospitality and Restaurants, Access Control, Inventory, Store Floor Application

Shopevolution 7 Middleware

Self-shopping software platform.

• Cloud-based Multi-store Support
• Smartphones Android and iOS Support
• Joya Touch Support
• Enhanced Consumer Features including social shopping, eCoupons, shopping list, product rating, indoor navigation, best sellers

Launch at ˝One Device for all retail event˝ in Venice on the 26-27 October

IA new products

Identification

WebSentinel PLUS

Monitor and information collector for Factory Automation and Transportation and Logistics applications.

Safety and Sensors

S65-M

Long Range Background Suppressor for Factory Automation mainly for Packaging applications

Safety and Sensors TL46 Low jitter Low jitter contrast sensor for Factory Automation mainly for Packging applications

Machine Vision Impact + Object Detector Machine vision solution for fast and reliable object detection applications for T&L Industry based on the P-Series Smart Camera.

Outlook

2016 Outlook

• Expected 2016 revenues almost in line with 9 months growth trend.
• R&D investment up to 9.0% of revenues to keep the innovation leadership in the market
• Strong Operating Cost control and reduction of G&A
• Maintain Strong Cash Generation

Contact

IR CONTACTS

IR Manager Vincenza Colucci CDR Communication Srl Tel. +39 335 6909547 vincenza.colucci@cdr-communication.it

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

DATALOGIC ON LINE

www.datalogic.com

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

© 2016 Datalogic S.p.A. - All rights reserved. • Protected to the fullest extent under U.S. and international laws. • Copying, or altering of this document is prohibited without express written consent from Datalogic S.p.A. Datalogic and the Datalogic logo are registered trademarks of Datalogic S.p.A. in many countries, including the U.S.A. and the E.U. All other brand and product names may be trademarks of their respective owners.

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