Datalogic — Earnings Release 2018

May 9, 2018

Q1 2018 Conference Call

May 9, 2018

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Improved results despite forex effect

€ m

Net Cash position at €32.3

Q1 2018 Highlights GROUP

VERTICALS

FINANCIALS

• Revenues growth negatively impacted by forex vs Q1 2017
• Positive results on profitability in line with expectations
• Main industries growing double digits net of forex, whilst Channel negatively affected by seasonality in the first part of the year
• Retail on track to recovery: + 12.6% net of forex, across all main geographies mainly driven by tiers 1 projects
• Manufacturing confirming strong growth, + 18.2% net of forex, lead by China
• T&L at + 29.6% net of forex, driven by large US postal projects and new clients' acquisition in other geographies
• Revenues up 1.0% YoY to €142.9 m (+7.8% at constant forex)
• GOM improvement vs Q1 2017, capitalizing on improvements from previous year
• Increasing investments in R&D from 9.3% to 10.2% on revenues and in distribution to strengthen sales organization

• Net Cash position improvement: from €30.1 m to €32.3 m

• We satisfy globally the Retailers business needs, from Distribution Center to Check Out and Shoppers' Home.

• Datalogic was the first company to introduce the full imaging bi-optic POS scanner and to conceive a fully automated portal scanner
• New Data capture products for E-commerce and multichannel
• Data analytics for location based services, indoor navigation, customer tracking either for path and time spent in front of shelves

	MARKET OUTLOOK		DATALOGIC RESULTS
 store	90% of transactions are still completed in		Q1 2018 Revenues €68.5 mln (+4.9% YoY, +12.6% ex Forex), 52% of DL Division' Revenues
 – online shopping)	E-commerce drives change towards an omnichannel experience (brick and mortar	 	Positive after two quartes' decline, expected to further improve over next quarters Double digit steady growth at constant Forex; EMEA +14%, North America +13%, Latam +32%
 increase.	Distribution Centers automatization		Recovery in NA thanks to big deals, still to be improved coverage and run-rate business

Manufacturing The factory of the future

• Unique portfolio provider of smart, interconnected devices able to protect, identify, sense, check and mark.
• Datalogic is providing multi-product portfolio to serve all the major manufacturing clients: Automotive, Food and Beverage, Automated Machinery and Electronics, and Intralogistics.

• Wide-range offer adapting to every customer

• Safety Laser Sentinel

• Traceability Identification products and Laser marking
• Quality Control Machine Vision
• Expanding into Intralogistic solutions and Robotic/AGV guidance

MARKET OUTLOOK	DATALOGIC RESULTS
 Industry 4.0 is pushing for multi	Q1 2018 Revenues €41.6 mln (+13.8% YoY,  18.2% ex Forex), 31% of DL Division' Revenues
technology adoption, product interoperability and enhancement self diagnostic capabilities	Performance driven by China and EMEA:  +55.4% and +14.7 at constant Forex, respectively, whilst North America flat
The adoption of key digital technologies  shows a strong growth over the next 5 years	Massive sales organization's hiring plan  ongoing: around + 90 people in key areas expected in 2018

Transportation & Logistics Visibility and interaction with the customer

• We ensure efficient & effective Data Collection to Courier-Express-Parcels, Airports, warehouse operators and sorting processes.
• The first generations of self-driving vehicles (autonomous shuttles and forklifts), used in controlled areas of the warehouse are being developed
• Datalogic is at the forefront of the development of airport systems, since 1984 with the first automatic reading station in Milan, to the recent contract with a main European hub in compliance with new IATA requirements.
• Datalogic's proven capabilities are reflected by the recent "Platinum" supplier qualification granted by a world leader in the shipping and logistics sector.

	MARKET OUTLOOK		DATALOGIC RESULTS
	Growth is driven by E-commerce: high speed sorting, ability to manage any size of		Q1 2018 Revenues €12.8 mln (+21.2%  YoY, 29.6% Ex Forex), 10% of DL Division' Revenues
	parcel, and high flexibility		Growing double digits both in EMEA and  North America: +32.7% and +28.7% at constant Forex, respectively
	Strong demand for solutions beyond barcode		 Big projects won in North America, mainly in CEP, and strong new customers' base acquisition both in North America and EMEA. New partnerships ongoing to offer integrated solutions

Healthcare Meet regulations and Higher Patient Safety

• We empower the entire Healthcare ecosystem from drug production to patient care.
• Datalogic is the sole company providing unique product features for the HC industry such as:
• Anti-microbial enclosures to enhance protection against germs and bacteria
• Inductive charging technology for battery recharge avoiding maintenance cost related to contact damaging/wearing
• Green spot good match to ensure positive medicine-patient identification
• LAB Analysis is also working to ensure the reliability of data based on the patient

MARKET OUTLOOK		DATALOGIC RESULTS
 Drugs tracking to avoid counterfeit medications		Q1 2018 Revenues €4.6 mln (-35.7% YoY, - 30.2% ex Forex), 3% of of DL Division' Revenues
Growing demand inside hospitals and 		Decline in Q1 due to tough comparison with Q1 2017, where major deals with 2 relevant US hospital chains occurred
clinical labs for traceability of people and surgical tools.	 	Further strengthening of the North America sales organization ongoing. Revenues trend reversal expected in H2 mainly.

		2018 First Quarter Product Launches
	STATIONARY LASER SCANNER • Flexible • Powerful • Compact • Smart • Cost effective	AUTOMOTIVE, FOOD & BEVERAGE, PHARMACEUTICAL AND OTHER MANUFACTURING PLANTS.
	2D DECODER SCAN ENGINE • Ultra compact • High Perfromances	RETAIL T&L HEALTHCARE ENTERTAINMENT, HOSPITALITY, COMMERCIAL SERVICES
	MARVIS™ MARK READ VERIFY INTEGRATED SOLUTION in-line validation of marked traceability codes with one software suited for all you laser marking and traceability needs	AUTOMOTIVE SURGICAL TOOLS AND MEDICAL DEVICES GENERAL MANUFACTURING
	SH15 / SH21 BLACKLINE COMPUTERS Rugged vehicle mounted computer ( VMC) as well as fixed mount kit	MANUFACTURING: MES QUALITY CONTROL KIOSK APPLICATIONS LOGISTICS (15 INCH CAN ALSO BE MOBILE)

Financials

Quarterly trend

Revenues and profitability improvements

€ m	Q1 2018	Q1 2017	Var%
Revenues	142.9	141.5	0% 1
Gross Operating Margin	69.8	66.2	5% 5
%on Revenues	48 8%	46 8%
Operating expenses	(51.9)	(49.6)	4 6%
%on Revenues	(36 3%)	(35 1%)
EBITDA	22.0	20.8	5 7%
Ebitda margin	4% 15	7% 14
EBIT	16.5	15.3	8 3%
Ebit margin	11 6%	10 8%
EBT	14.7	14.0	9% 4
Taxes	(3.5)	(2.1)	67 9%
Net Income	11.2	11.9	(6 1%)
% Revenues on	8% 7	8 4%
Exchange Rate	2292 1	0648 1

• Revenues up 1.0% to €142.9 m (+7.8% at constant exchange rate)
• GOM confirming steady improving trend at 48.8% (around +200 bps vs Q1 2017)
• R&D on revenues from 9.3% to 10.2% (10.6% at Datalogic Business)
• Distribution costs: +5.4% YoY mainly due to reinforcement of S&D organization and marketing activities
• EBITDA margin improved to 15.4% thanks to GOM and seasonality of R&D and distribution costs
• Net Income slightly below due to tax rate seasonality

Group Revenues by country

€ m Q1 2018 Q1 2017 EMEA 81.8 78.6 4.0% 5.4% North America 39.6 43.6 (9.1%) 5.2% Latin America 2.9 2.6 10.9% 27.7% Asia Pacific 18.6 16.7 11.5% 22.6% Total Revenues 142.9 141.5 1.0% 7.8% Var% Var% Ex forex

REVENUES BY GEOGRAPHIC AREA

• Sound growth net of forex
• Continuous growth in APAC driven by China (+26% net of forex), in Manufacturing mainly
• Confirming leadership in EMEA in all the main verticals
• NA positive net of forex, lead by T&L and Retail. Strong performance of Solution Net Systems, whilst Informatics still negative
• Latam and Apac recovery notwithstanding forex thanks to Retail, mainly

Group Revenues & EBITDA by division

REVENUES BY DIVISION

€ m	1Q2018	1Q2017	Var%
Datalogic Business	132.6	131.5	0.8%
Solution Net Systems	6.1	5.0	22.7%
Informatics	4.8	6.0	(20.0%)
Adjustments	(0.5)	(0.9)	(47.1%)
Total Revenues	142.9	141.5	1.0%

• Datalogic driven at constant forex by growth of Fixed Retail and Stationary Industrial Scanners and Safety products, Scan Engines.
• Solution Net Systems strong top line growth (+22.7%) thanks to new projects, and sound improvement in profitability
• Informatics top line still on downward trend but profitability turnaround continuing

EBITDA BY DIVISION
€ m	1Q2018	1Q2017
Datalogic	20.8	21.1
Solution Net Systems	1.0	0.1
Informatics	0.1	(0.4)
Total Group	22.0	20.8

* Excluding GCO and Service

Consolidated Balance Sheet

€ m

	Dec 2017	Mar 2018		Dec 2017	Mar 2018
Total Fixed Assets	347.9	339.7	Net Financial Position	(30.1)	(32.3)
Trade receivables	83.2	73.9
% 12m rolling sales on	13 7%	12 2%
Inventories	85.9	90.2
rolling sales % 12m on	14 2%	14 9%
Trade payables	(107.7)	(91.3)	Net Equity	353.0	355.6
rolling sales % 12m on	-17 8%	-15 0%
Trade Working Capital	61.5	72.8
rolling sales % 12m on	10 1%	12 0%
Other assets/liabilities	(86.5)	(89.3)
Net Invested Capital	322.9	323.3	Total Sources	322.9	323.3

Net Debt Analysis: Dec'17 – Mar'18

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
• Retail: continuing in growth recovery quarter over quarter in the Americas mainly through new products and expanding sales organization
• 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
• T&L: keep growing in main Geo Areas, through new projects and new clients' acquisition
• HC: growth expectations mostly skewed toward H2

New product launched in H2 2017 at full speed in H2 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

May 23rd ,2018 Shareholders' meeting

August 9th, 2018 6M results

November 13th, 2018 9M results

DATALOGIC ON LINE

www.datalogic.com