Datalogic — Call Transcript 2016

Aug 4, 2016

1H 2016 Conference Call

August 4th, 2016

Agenda

1H 2016

Outlook

1H 2016

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

Highlights 2Q 2016

Revenues			+8.4% YoY to 146.5 mln Euro (+9.4% at constant exchange rate) mainly thanks to North America both in ADC and IA and to Europe in IA
EBITDA		 	+40.3% YoY to 26.1 mln Euro (+38.8% at constant exchange rate) thanks to operating cost reduction and to the shift of some R&D expenses (R&D costs +3.1% YoY, equal to 8.3% of revenues) EBITDA margin at 17.8% (17.5% at constant exchange rate)
Positive trend of financial costs continues  Net Profit Net profit + 39.3% to 16.1 mln Euro 
	€ mln			2Q2016	2Q2015	YoY%	1Q2016	QoQ %
	Revenues			146.5	135.2	8.4%	135.4	8.2%
		Gross Operating Profit		68.9	63.6	8.4%	62.1	10.9%
		EBITDA		26.1	18.6	40.3%	18.8	38.9%
		EBITDA Margin		17.8%	13.8%		13.9%
	EBIT			21.1	13.9	51.8%	14.2	48.5%

Net Profit 16.1 11.6 39.3% 10.1 59.9%

2Q 2016: Best quarter over two years

2Q new products: DL-Axist

FULL TOUCH ANDROID RUGGED PDA

inch HD multi-touch screen with Corning® Gorilla® Glass 3 5

802.11 a/b/g/n with MIMO technology (first terminal adopting MIMO in the industry) and Cisco CCX v4 certified

IP67

rating and 1.8 m / 6.0 ft drop resistance

Bluetooth® wireless technology v4.0 with BLE for beacons

NFC for configuration and pairing

Enterprise Class Assisted GPS for location-based applications 3G/4G

cellular for voice and data communication

Highlights 1H 2016

+9.5% YoY to 281.8 mln Euro (+9.5% net FX effect)

• Growth driven by ADC in North and Latin America thanks to robust investments by retailers and the launch of technologically advanced products
• Industrial Automation strongly grew in Europe and Greater China
• Strong improvement of the orders intake : +7.2% YoY to 288.2 mln Euro

EBITDA

Revenues

• +31.0% YoY to 45.0 mln Euro (+31.1% net FX effect); EBITDA margin to 16.0% (16.0% net FX effect) from 13.3% in 1H2015
• Administrative costs down 5.8% as effect of recovery in efficiency thanks to Management actions:
• Opening of the new Hungarian Plant
• Centralization of Procurement

Net Profit

• Improvement of financial costs thanks to a cheaper financing contract and to the presence, in H12015, of up front fees connected to the early repayment of previous loans
• Tax rate at around 20%
• Robust growth of net income: + 22% to 26.2 mln Euro

1H 2016 Profit and Loss

€ 000	1H2016		1H2015		Var %
Revenues	281,842	100.0%	257,485	100.0%	9.5%
COGS	(150,822)	(53.5%)	(136,046)	(52.8%)	10.9%
Gross Operating M argin	131,020	46.5%	121,439	47.2%	7.9%
Other Revenues	2,038	0.7%	1,209	0.5%	68.6%
R&D	(24,317)	(8.6%)	(23,449)	(9.1%)	3.7%
Distribution Costs	(51,189)	(18.2%)	(50,132)	(19.5%)	2.1%
Adm inistrative Expenses	(18,541)	(6.6%)	(19,691)	(7.6%)	(5.8%)
Other operating expenses	(891)	(0.3%)	(1,042)	(0.4%)	(14.5%)
Total Operating expenses and others	(94,938)	(33.7%)	(94,314)	(36.6%)	0.7%
Non recurring costs/ rev	(370)	(0.1%)	(750)	(0.3%)	(50.7%)
Am ort. Intang. Assets from acquis.	(2,437)	(0.9%)	(2,899)	(1.1%)	(15.9%)
Operating Profit (EBIT)	35,313	12.5%	24,685	9.6%	43.1%
Financial (costs)/ rev.	(1,877)	(0.7%)	(3,162)	(1.2%)	(40.6%)
Results from equity investm ents	(402)	(0.1%)	9 7	0.0%	n.a.
Foreign exchange (costs)/ rev.	(283)	(0.1%)	3,390	1.3%	n.a.
EBT	32,751	11.6%	25,010	9.7%	31.0%
Taxes	(6,575)	(2.3%)	(3,559)	(1.4%)	84.7%
Net Income	26,176	9.3%	21,451	8.3%	22.0%
Depreciation	(4,357)	(1.5%)	(3,694)	(1.4%)	17.9%
Am ortization	(2,480)	(0.9%)	(2,298)	(0.9%)	7.9%
EBITDA	44,957	16.0%	34,326	13.3%	31.0%
Exchange Rate	1.1159		1.1158

Revenues Trend by Division

• ADC Division grew by 9.8% to 194.8 million Euro
• POS check out fixed scanners with the new imaging technology is driving growth in Retail
• The new DL-Axist, a Full Touch Android rugged PDA launched in May is pushing sales of mobile computers
• The Industrial Automation division improved by +13.7% to 75.7 million Euro
• Strong growth in volume of ID products sold in particular thanks to Matrix family and Safety Barriers
• BU Systems, that benefits from several new orders, among which Royal Mail, grew by 61.4%

REVENUES BY DIVISION (%)

REVENUES BY DIVISION

REVENUES BY DIVISION
€mln	1H 2016	1H 2015	Var %
ADC	194.8	177.4	9.8%
I A	75.7	66.6	13.7%
- IA ex BU Systems	65.8	60.4	8.9%
Informatics	12.8	14.5	(11.8%)
Corporate and Adj.	(1.5)	(1.0)	50.0%
Total Revenues	281.8	257.5	9.4%

Revenues Trend by Country

REVENUES BY GEOGRAPHIC AREA

REVENUES BY GEOGRAPHIC AREA
€mln	1H 2016	1H 2015	Var %
Europe	144.5	133.0	8.7%
North America	84.5	73.6	14.8%
Asia Pacific	34.7	33.9	2.4%
ROW	18.1	16.9	6.7%
Total Revenues	281.8	257.5	9.5%
Asia Pacific	ROW 6 %

• Europe continues to generate robust growth in particular in IA* (+11.8%) and in ADC (+7.6%), confirming the leadership of the Group
• North America: strong growth of ADC (+ 22%) and slight improvement in IA* (+1.1%) thanks to growth in 2Q (+12.5%), reflecting the efforts made in distribution.
• China grew by 13.1% mainly driven by IA and a strong recover in Q2

FY Segment Reporting: GOP and EBITDA

86.1 29.6 6.5 (0.8) 121.4 92.3 33.2 5.8 (0.4) 131.0 ADC I A Informatics Corporate Total Group 1H2015 1H2016 € mln € mln

GOP BY DIVISION EBITDA* BY DIVISION 41.1 1.3 0.1 (8.2) 34.3 48.6 3.8 (0.3) (7.2) 45.0 ADC I A Informatics Corporate Total Group

1H2015 1H2016

€ mln € mln

€ mln			€ mln
Gross Operating M argin	1H 2016	1H 2015	EBITDA M argin	1H 2016	1H 2015
ADC	47.4%	48.6%	ADC	24.9%	23.1%
Industrial Automation	43.9%	44.5%	Industrial Automation	5.1%	2.0%
- IA ex BU Systems	48.7%	50.1%	- IA ex BU Systems	7.2%	7.4%
Informatics	45.7%	44.8%	Informatics	(2.3%)	0.8%
Total Group	46.5%	47.2%	Total Group	16.0%	13.3%

(*) 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	1H 2016	1H 2015	TWC/ Revenues	1H 2016	1H 2015
ADC	9.8%	8.7%	ADC	8.8%	10.7%
Industrial Automation	12.4%	12.7%	Industrial Automation	13.4%	12.7%
Informatics	5.9%	3.9%	Informatics	15.6%	9.6%
Total Group	8.6%	9.1%	Total Group	9.9%	10.5%

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

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 June '16 YTD Actual (1.1159) and June '15 YTD Actual (1.1158) €/USD exchange rates.

Consolidated Balance Sheet at 30.06.2016

€ mln

Outlook

2016 Outlook

• Maintain the positive trend in Europe and double digit growth in North America and China.
• Improvement of Operations Efficiency reducing weight of COGS thanks to reduction of material costs and insourcing of core components
• R&D investment up to 9.0% of revenues to keep the innovation leadership in the market
• Continuous optimization of Operating Expenses and reduction of G&A, thus indirect procurement costs management
• Maintain Strong performance on Cash

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

NEXT EVENTS

October 7th, 2016 STAR Conference - London

November 11th, 2016 9M results

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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