Datalogic — Call Transcript 2020

May 15, 2020

Q1 2020 Results Conference Call

MAY 15, 2020

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. Neither the Company nor any of its subsidiaries, affiliates, branches, representative offices (the "Group"), as well as any of their directors, officers, employees, advisers or agents (the "Group Representatives") accepts any responsibility for/or makes any representation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein or any other related information regarding the Group, whether written, oral or in visual or electronic form, transmitted or made available. This document may contain forward-looking statements about the Company and/or the Group based on current expectations and opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group. These forward-looking statements are subject to significant risks and uncertainties (many of which are outside the control of the Company and/or the Group) which could cause a material difference between forward-looking information and actual future results. The information set out in this document is provided as of the date indicated herein. Except as required by applicable laws and regulations, the Company assumes no obligation to provide updates of any of the aforesaid forward-looking statements. Under no circumstances shall the Group and/or any of the Group Representatives be held liable (for negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise in connection with the document or the aforesaid forward-looking statements. This document does not constitute an offer to sell or a solicitation to buy or subscribe to Company shares and neither this entire document or a portion of it may constitute a recommendation to effect any transaction or to conclude any legal act of any kind whatsoever.

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Q1 2020 Results

Net Debt at €21.0

Q1 2020 Results

Q1 2020 Financial Highlights

• ❑ Significant Covid-19 impact on Revenue in APAC, next to already anticipated phase out of Retail and T&L projects in EMEAI and North America
• ❑ The restrictive measures adopted initially in APAC and subsequently in Europe and North America led to revenue slippage mainly due to Supply Chain and Demand slowdown

• ❑ Positive performance of Retail and Healthcare in the Americas. T&L affected by completion of large orders in US and installation postponement in EMEAI due to Covid-19

• ❑ Vitality index continue improving from 19.5% in Q12019 to 22.2% in Q12020, mainly driven by HHS and Mobile

• ❑ Adj EBITDA mainly affected by lower volume and increase in R&D to protect the Technology roadmap, partially offset by S&D cost reduction program launched in 2020.
• ❑ Free Cash Flow at negative €27.0 m due to the cash absorption from operations and increased safety stocks due to Covid-19

Group Revenues by Segment

❑ Retail: double-digit growth in the Americas (+14.2%), affected by slowdown in APAC (-14.7%) and EMEAI due to previous year FRS rollouts (-18.3%)

• ❑ Manufacturing: first signs of recovery in APAC, while EMEAI and North America impacted by the slowdown in the Automotive and Machine Building sector
• ❑ T&L: tough base comparison due the conclusion of important multi-year contracts and constrains at Customer sites due to Covid-19
• ❑ Healthcare: positive growth in North America Hospitals offset by the decrease in EMEAI and APAC
• ❑ OEM: recorded a very positive performance across all geographies despite its still marginal contribution to the Group's revenues
• ❑ Channel: overall decrease with destocking effect in uncertain market

			Q1 2019	Var %
	€m	Q1 2020	Restated	vs. Q1
			*	2019
	Retail	47.3	51.7	(8.5%)
	Manufacturing	25.9	28.5	(9.1%)
	Transportation & Logistics	8.5	14.1	(39.6%)
	Healthcare	4.1	5.0	(17.7%)
	OEM	0.5	0.2	110.4%
	Channel (Unallocated)	29.0	36.2	(19.9%)
	Total DL Business	115.3	135.6	(15.0%)
	Solution Net Systems	5.5	5.5	1.0%
	Informatics	4.2	4.3	(2.4%)
	Intra division	(0.8)	(0.8)
	Total Datalogic	124.2	144.6	(14.2%)
Building sector
Channel: overall decrease with destocking effect in uncertain market ❑
the " New Sales Organization" launched in 2020

^* The comparative data as at 31 March 2019 have been restated to reflect the new allocation of the Group's revenues to geographic areas and business sectors, as redefined following

Group Revenues by Geography

❑ Americas: negative performance in Manufacturing and T&L, following the completion of multi-years significant contracts,

• ❑ EMEAI: decline driven mainly by phase out of major fixed retail scanners roll-outs in Germany, UK and Iberia
• partially offset by growth of Healthcare (+4.6%) and Retail (+14.2%) driven by a large project in non-Greocery Retail
• ❑ APAC: mainly driven by negative performance of China and Japan

			Q1 2019	Var %
	€m	Q1 2020	Restated	vs. Q1
			*	2019
	EMEAI	71.2	83.7	(14.8%)
	Americas	39.8	46.1	(13.7%)
	APAC	13.1	14.9	(11.7%)
	Total Datalogic	124.2	144.6	(14.2%)
❑	APAC: mainly driven by	negative performance	of China	and Japan
following the " New Sales Organization" launched in 2020

^* The comparative data as at 31 March 2019 have been restated to reflect the new allocation of the Group's revenues to geographic areas and business sectors, as redefined

❑ Vitality Index (New products*/ sales) account for 22.2% in Q1 2020 improving from 19.5% in first quarter 2019.

❑ R&D spending** , went from €14.0 m to €18.8m, reaching an incidence on revenues of 15.1%, compared to 9.7% in the first quarter of 2019

Q1 2020 Launches and Innovation

S100 IO-Link Models

S100 Sensor family expansion with IO-link connectivity, features improvement and new mark reader model

New: Safety & Sensor BU

Q1 2020 P&L

€ m	Q1 2020	Q1 2019	Variance Reported	Constant F X
					▪ Gross Margin at 46.7%, decrease mainly due to
Revenues	124.2	144.6	(14.2%)	(15.0%)	volumes and lower absorption of fixed costs. Price
Gross Margin	58.0	70.2			substantially in line with past trend
% on Revenues	46.7%	48.5%	-1.8 pp	-1.3 pp
Operating expenses	(56.7)	(53.9)			▪ Operating expenses at €56.7 m:
% on Revenues	(45.7%)	(37.3%)	-8.4 pp		✓ R&D expenses increased by 18.3% for strategic
Adjusted EBITDA	7.3	21.6
% Adj. Ebitda margin	5.9%	15.0%	-9.1 pp	-8.5 pp	investments
EBIT	(1.2)	14.8			✓ S&D €2.6m savings vs LY net of 2019 one-offs
% Ebit margin	(1.0%)	10.2%	-11.2 pp	-10.7 pp
Net Income	(4.3)	12.6			✓ G&A expenses in line with previous year
% on Revenues	(3.4%)	8.7%	-12.1 pp	-11.6 pp	▪ Financial charges impacted by unfavorable FX and
EUR/USD FX Exchange Rate	1.10	1.14			negative fair value on cash equivalents investments at
					the lows of Q1 financial market

EBITDA Adj: actual vs last year

€ m

* Excluding Service and other non significant items

Net Debt & Cash Flow Analysis : Dec'19 – Mar'20

€ m

Covid-19 - Actions in a challenging environment

▪ Health and safety of our people is a priority. Sound health and safety protocols established for all facilities

▪ Strong commitment to guarantee optimal continuity to our customers and partners, whilst working

• Smart working established globally to the maximum extent possible
• Ensuring operations in production with highest health and safety standards in compliance with regulations
• remotely by hosting virtual meetings and demonstrations.
• ready to prevent Covid-19 infection and ensure correct patient identification.

• Cost management by:

• efficiency

▪ Donations and community support by providing to Italian hospitals antimicrobial devices, disinfectant

▪ Activation of Government social schemes and other employment support tools ▪ Sound Cost reduction plan on any discretionary spending while driving commercial

• Strong Financial Structure with Net Debt of €21.0 m. Additional credit lines available providing significant headroom to secure future investment for growth in uncertain environment.

Ready for post Covid-19 challenges

Mobile

Memor 10 Memor 20 Memor 1 Joya

Antimicrobial disinfectant-ready devices

• Datalogic supports the fight against Coronavirus • Outer shell of our devices made of antimicrobial plastic:
• repels pathogens and limits their infectious diffusion
• resilient to withstand numerous cleanings by harsh medical disinfectants approved by EPA, including disinfectants that are qualified for use against COVID-19

Stationary Industrial Scanners

• Number #1 in Industrial Scanners

• Complete offer for T&L and E-commerce applications

• E-commerce

• T&L

2020 Outlook

▪ Given the current crisis relating to the Covid-19, and the timing of a possible recovery, the Group believes it is not yet possible to estimate the overall impact it will have on the full year. The evolution of the pandemic, the resolutions of authorities regarding lockdowns, as well as market reactions and possible recessions imply negative growth forecasts for the first half of 2020 and

▪ The Group is implementing measures to mitigate the financial impact of Covid-19, focusing on solid cost reduction plans, while

• potentially for the remainder of the year
• protecting technology investments and strengthening the already sound financial structure
• in the medium and long term

▪ Despite the expected short-term negative trend, the solid economic and financial fundamentals will lead Datalogic to grow again

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

May 19, 2020 Italian Digital Equity Forum UniCredit/Kepler Cheuvreux

May 26, 2020 Virtual STAR Conference Milan

June 4, 2020 Shareholders' Meeting

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This presentation contains statements that are neither reported financial results nor other historical information. These statements are forward-looking 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 corporate@datalogic.com ww.datalogic.com