Datalogic — Call Transcript 2018

Mar 21, 2018

FY 2017 Conference Call

March 21, 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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Best ever results in Datalogic history Q4 RESULTS €25.4 EBITDA (+7%) 16.4% EBITDA MARGIN (+1.1 p.p.) REVENUES €155.3 +0.4% (+3.7% at constant FX) €15.0 NET INCOME (+202%) FY2017 RESULTS €103.3 EBITDA (+14.3%) 17.0% EBITDA MARGIN (+1.3 p.p.) REVENUES €606.0 +5.1% (+6.0% at constant FX) €60.1 NET INCOME (+31%) Net Cash position at €30.1 € m

2017 Highlights
GROUP	Record results in Datalogic history and proposal to increase ▪ ordinary dividend to €0.50, +67% YoY ▪ New customer centric organization bringing tangible benefits
OPERATING ACTIVITY	▪ Further strengthening of Datalogic presence in the highest growing APAC market and further consolidation of leadership in the EMEA ▪ T&L and Healthcare double digit growth in North America, whereas Manufacturing led by China. Retail still negative due to huge impact of forex effect and the late launches of new Retail Products, mainly in NA
FINANCIALS	▪ Revenues up 5.1% YoY to €606 m (+6% at constant exchange rate) ▪ EBITDA at the highest ever in both €m and Margin ▪ €103.3 m (+14.3% YoY) ▪ EBITDA Margin at 17% from 15.7% ▪ Increasing investments in R&D: Datalogic Business from 9.0% to 9.5% on revenues ▪ Strong cash flow generation: positive PFN to €30.1 m

Financials

Q4 Growth continues despite forex impact

	€ m	Q4 2017	Q4 2016	Var%
Revenues		155.3	154.7	0.4%
Gross Operating Margin		75.9	70.8	7.2%
	%on Revenues	48.9%	45.7%
Operating expenses		(55.2)	(51.8)	6.5%
	%on Revenues	(35.5%)	(33.5%)
EBITDA		25.4	23.7	7.0%
	Ebitda margin	16.4%	15.3%
EBIT		20.4	17.5	16.7%
	Ebit margin	13.1%	11.3%

• Revenues up 0.4% to €155.3 m mainly as effect of unfavorable forex (+3.7% at constant exchange rate)
• Major GOM improvement thanks to mix and cost efficiencies (+7.2% vs Q4 2016)
• Operating expenses increased due to planned investment in R&D (10,2% on Sales for Datalogic business) & Distribution
• G&A almost flat
• EBITDA margin at 16.4% from 15.3%

Improvements across the whole P&L

€ m	FY2017	FY2016	Var%
Revenues	606.0	576.5	5.1%
Gross Operating Margin	288.4	265.1	8.8%
%on Revenues	47.6%	46.0%
Operating expenses	(202.7)	(192.3)	5.4%
%on Revenues	(33.5%)	(33.4%)
EBITDA	103.3	90.4	14.3%
Ebitda margin	17%	15.7%
EBIT	82.9	70.2	18.0%
Ebit margin	13.7%	12.2%
EBT	75.5	66.9	12.8%
Taxes	(15.4)	(21.0)	-27.0%
Net Income	60.1	45.8	31.0%
% on Revenues	9.9%	8%
Exchange Rate	1.1297	1.1069

• Revenues up 5.1% to €606.0 m (+6.0% at constant exchange rate)
• GOM showing steady improving trend at 47.6% (around +160 bps vs 2016)
• R&D on revenues from 8.7% to 9.1% (from 9% to 9,5% for Datalogic Business)
• Timing effects & efficiencies on distribution costs (+2.3% YoY)
• EBITDA margin at 17% mainly thanks to improvement in the GOM
• Unfavorable forex and higher gross debt on financial costs
• Tax rate at ~ 20%
• Impressive growth of net income +31% to €60.1 m

Group Revenues by country

REVENUES BY GEOGRAPHIC AREA

€ m	FY 2017	FY 2016	Var%
EMEA	327.5	304.5	7.5%
North America	171.4	178.3	(3.8%)
Latin America	27.5	30.0	(8.5%)
Asia Pacific	79.6	63.6	25.1%
Total Revenues	606.0	576.5	5.1%
Latin America 5%	APAC 13%		EMEA

• Strong growth in APAC driven by China (+55%) in Manufacturing mainly
• Confirming leadership in EMEA led by Retail (+11%)
• NA growth driven by T&L (+11%) and Healthcare (+97%); strong performance of Solution Net Systems. Retail and Informatics negatively offsetting performance
• LA heavily impacted by FX and 2016 large deals

North America 28%

54%

Group Revenues & EBITDA by division

REVENUES BY DIVISION

					Informatics
	€ m	FY2017	FY2016	Var%	Solution Net Systems	3%
Datalogic		564.0	534.2	5.6%	4%
Solution Net Systems		24.7	20.2	22.5%
Informatics		20.6	24.4	(15.5%)
Adjustments		(3.3)	(2.3)	42.2%
Total Revenues		606.0	576.5	5.1%			Datalogic

• Datalogic driven by growth of Fixed Retail Scanners, Identification and Hand Held products. Strong growth through Channel towards SMEs (+14.2%)
• Solution Net Systems strong top line growth (+22.5%) and sound turnaround in profitability
• Informatics top line still on downward trend but profitability turned positive

Focus on Datalogic Division

pipeline

(*)The Channel (Unallocated) includes revenues not directly attributable to the 4 identified industries.

11

Consolidated Balance Sheet

€ m

	Dec 2016	Dec 2017		Dec 2016	Dec 2017
Total Fixed Assets	371.7	347.9	Net Financial Position	(3.5)	(30.1)
Trade receivables	75.5	83.2
% on 12m rolling sales	13.1%	13.7%
Inventories	82.3	85.9
% on 12m rolling sales	14.3%	14.2%
Trade payables	(104.6)	(107.7)	Net Equity	336.4	353.0
% on 12m rolling sales	-18.1%	-17.8%
Trade Working
Capital	53.2	61.5
% on 12m rolling sales	9.2%	10.1%
Other assets/liabilities	(92.1)	(86.5)
Net Invested Capital	332.9	322.9	Total Sources	332.9	322.9

New products

Outlook

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)
• Maintain a Cash Generation profile
• T&L: keep growing in main Geo Areas, capturing ecommerce & CEP trends
• Retail: growth recovery in the Americas through new products and expanding sales organization
• HC: keep on substantially growing, both in North America & EMEA
• 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

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▪ Good response of customers on new products launched in 2017; a solid pipeline of new products launches expected in 2018

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

March 27th, 2018 Star Conference Milan

May 9th, 2018 1Q results

May 23rd ,2018 Shareholders' meeting

August 9th, 2018 6M results

November 13th, 2018 9M results

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www.datalogic.com