Datalogic — Call Transcript 2017

Aug 4, 2017

H1 2017 Conference Call

August 4th, 2017

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Best Ever Figures in 45 Years History

Q2 RESULTS

Positive Net Debt position at €5.5

€ mln

Q2 2017 Highlights

New organization keep driving sound performance across main industries and geographic areas

• APAC leading the growth at double digit rates, driven by China
• Resilient growth in EMEA, led by Retail
• NA double digit growth in T&L and Healthcare
• Increasing demand for automation, quality and process efficiency

• Double digit growth in Manufacturing, Transportation & Logistics and Healthcare

• R&D investments +7.4% YoY

• New products on sales at 11.9% *, due to strong pipeline planned in H2

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

Focus M&A: Soredi acquisition

• Acquisition of 100% of Soredi Touch Systems GmbH
• German company leader in technology for terminals and in particular forklifts terminals
• Maximum financial commitment of €10 mln (€8 mln cash and €2 mln Datalogic shares)

Financials

Best quarter in Datalogic history

REVENUES

Sound profitability growth

€ mln	Q2 2017	Q2 2016	Var%	Revenues up 7.7% to € 
Revenues	157.8	146.5	7.7%	157.8 mln (+6.4% at constant exchange
Gross Operating Margin	76.1	68.9	10.5%	rate)
%on Revenues	48 2%	0% 47		Booking confirmed at  double digit: +10.2%
Operating expenses	(48.7)	(47.8)	1.8%	Product mix and cost 
%on Revenues	(30 9%)	(32 7%)		efficiencies push GOM over 48%
EBITDA	31.1	26.1	18.8%
Ebitda margin	19 7%	8% 17		Operating expenses on  down 1.8% revenues
EBIT	25.9	21.1	22.9%	due to timing effects on R&D & distribution
Ebit margin	16 4%	14 4%		costs

• 157.8 mln (+6.4% at constant exchange rate)
• Booking confirmed at double digit: +10.2%
• Product mix and cost efficiencies push GOM over 48%
• Operating expenses on revenues down 1.8% due to timing effects on R&D & distribution costs
• EBITDA margin to 19.7% notwithstanding negative EUR USD FX

Improvements across the whole P&L

€ mln	H12017	H12016	Var%		Revenues up 6.2% to €299.3
Revenues	299.3	281.8	6 2%		mln (+4.8% at constant exchange rate)
Gross Operating Margin	142.3	130.9	8 6%
%on Revenues	5% 47	46 5%			GOM steady improving trend QoQ, at 47.5%
Operating expenses	(98.3)	(94.9)	3 6%
%on Revenues	(32 8%)	(33 7%)			R&D on from 8.6% revenues to 8.8%
EBITDA	51.8	45.0	15 3%
Ebitda margin	17 3%	16 0%			Timing effects on R&D &
EBIT	41.2	35.3	16 6%		distribution costs
Ebit margin	13 8%	12 5%			EBITDA margin to 17.3%
EBT	37.2	32.8	13 5%		notwithstanding negative
Taxes	(7.9)	(6.6)	20 0%		EUR USD FX
Net Income	29.3	26.2	9% 11		Forex and higher gross debt
% Revenues on	9 8%	9 3%			effect on financial costs
Exchange Rate	1 0830	1 1159

• mln (+4.8% at constant exchange rate)
• GOM steady improving trend QoQ, at 47.5%
• R&D on revenues from 8.6% to 8.8%
• Timing effects on R&D & distribution costs
• EBITDA margin to 17.3% notwithstanding negative EUR USD FX
• Forex and higher gross debt effect on financial costs
• Stable tax rate at ~ 21%

Group Revenues by country

REVENUES BY GEOGRAPHIC AREA
€ mln	H1 2017	H1 2016	Var%
EMEA	158.7	148.2	7.1%
North America	90.4	87.2	3.7%
Latin America	12.0	13.5	(11.4%)
Asia Pacific	38.3	33	16.0%
Total Revenues	299.3	281.8	6.2%
APAC 13% Latin America 4 % EM EA 53% North America 30%

• Revenues up 6.2% to € 299.3 mln (+4.8% at a constant exchange rate)
• Strong growth in APAC driven by China (+28%) in Manufacturing and T&L
• Confirming Leadership in EMEA led by Retail
• NA growth driven by T&L and Healthcare in Datalogic division (+7.3%); Informatics dragging down growth
• LA affected by large deals in 2016, but improving QoQ (+60%)

Group Revenues & EBITDA by division

REVENUES BY DIVISION

€ mln	H12017	H12016
Datalogic	279.2	260.2	7.3%
Solution Net Systems	10.6	10.0	6.3%
Informatics	11.2	12.8	(11.9%)
Adjustments	(1.7)	(1.0)	n.m.
Total Revenues	299.3	281.8	6.2%

• Datalogic Division over performing Group growth driven by a double digit growth of Fixed Retail Scanners, ID and Machine Vision
• Solution Net Systems, keeps on steady growing (+ 6.3%), and profitability turnaround
• Informatics still in a downward trend, though improving on a quarterly basis

	H12017	H12016
Datalogic	51.3	46.1
Solution Net Systems	0.8	(0.9)
Informatics	(0.3)	(0.3)
Total Group	51.8	45.0

Focus on Datalogic Division

EBITDA: actual vs last year

Consolidated Balance Sheet

		Dec 2016 Jun 2017		Dec 2016
Total Fixed Assets	371.7	354.0	Net Financial Position	(3.5)
Trade receivables rolling sales % 12m on	75.5 13 1%	87.1 14 7%
Inventories rolling sales % 12m on	82.3 14 3%	88.5 14 9%
Trade payables rolling sales 12m on	(104.6) -18 1%	(105.4) -17 7%	Net Equity	336.4
Trade Working Capital rolling sales 12m on	53.2 9 2%	70.2 11 8%
Other assets/liabilities	(92.1)	(99.4)
Net Invested Capital	332.9	324.8	Total Sources	332.9

Net Debt Analysis: December'16 – June'17

€ mln

New products

Q2 2017 New Products

MATRIX 120 Wide Angle and Polarized Models

Matrix 120™ is the smallest ultra-compact industrial 2D imager that fits into any integration space. This is the newest entry level member of the best-in-class Matrix family of high performance industrial 2D imagers.

The Matrix 120 imager leads the market for ease of use and has the highest industrial grade in its class; multiple models of the Matrix 120 imager allow it to cover an extensive range of applications in OEM and Manufacturing industries.

HALOGEN™

New adding to the Halogen™ DE2X12 family of ultracompact 2D MP imager scan engines. Wide angle model: 52°H x 40°V with parallel interface.

MEMOR™ X3 HC

Mobile computer for healthcare. This new offering provides healthcare professionals a safe and easy way to scan bar codes in a hospital or clinic. The Memor X3 HC is lightweight, pocketable, extremely durable, and resistant to the major chemical cleaners used in the healthcare ecosystem

Outlook

2017 Outlook

• Keep on growing in revenues at rates substantially in line with H1
• Strong focus on gross operating margin to maintain a sound profitability
• Increasing R&D & Distribution operating expenses in H2 to boost further growth & maintain leadership in the market
• Cash Generation through NWC improvement
• T&L: keep growing in main Geo Areas, capturing ecommerce & CEP trends
• Retail: growth recovery through strong pipeline of new products
• HC: enlarging customer base in North America
• Manufacturing: keep on steady growing in China and other main Geo Areas, backed by strong demand for automation

Strong pipeline of new products in H2 particularly in in the Retail and Manufacturing industries

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

ir@datalogic.com Via Candini, 2 40012 Lippo di Calderara di Reno Bologna – Italy

NEXT EVENTS

November 13th, 2017 9M results

September 6th , 2017 Italian Industrial Day Milan Italian Stock Exchange

October 10th, 2017 STAR Conference London

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