Datalogic

Investor Presentation • Sep 6, 2017

Italian Industrial Day Milan 6 September 2017

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.

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Group Overview

Datalogic at a glance

• Global leader of barcode readers, mobile computers, sensors, vision systems and laser marking systems with cutting-edge solutions in verticals market: Retail, Transportation & Logistics, Manufacturing, Healthcare Industries
• Founded in 1972 by Romano Volta in Bologna, Italy and listed on the STAR Segment of the Italian Stock Exchange since 2001
• A large portfolio of more than 1,200 patents
• About 2,700 employees, of which 470 in R&D
• Direct presence in 30 countries worldwide selling to 120 countries, with more than 1,000 partners worldwide

Over 40 years of Technological Innovation

1972	FOUNDATION	Established in Bologna
1988 1997	EXPANSION	Escort Memory Systems Inc. IDWare Mobile Computing&Comm.
2001	LISTING	Listed on the STAR segment of Italian Stock Exchange
2002 2011	EXPANSION	Minec AB Laservall SpA Informatics Inc. PSC Inc. Datasensor SpA Evolution Robotics Retail Inc. Accu-Sort Systems Inc. PPT Vision Inc.
2012 2015	INNOVATION	Acquisition of Multiwave Photonics SA Partnership with CAEN RFID Srl
2017	EXPANSION	Set up new One Datalogic Acquisition of Soredi Touch Systems GmbH

A Wide Geographical Footprint

Stock and Governance

Market Segment: STAR MTA Reuters Code: DAL.MI Bloomberg Code: DAL IM Outstanding Shares: 58,446,491 Share Par-Value: 0.52 Euro each

Ticker: DAL Price (September 4th, 2017): 27.8 Euro Market Cap (September 4th, 2017): 1.62 B Euro Specialist: Intermonte SIM Auditing Company: EY

Strategy

Unique Player across IA and ADC Markets

DATALOGIC is the only player across the Global competitive landscape who can boast a wide and consolidated experience in both the two fields of:

• Industrial Automation (dating back to the foundation of the company)
• Automatic Data Capture (leadership deriving from the acquisition of PSC USA )

A Unique Selling Proposition…

* 1H2017 Datalogic Division revenues breakdown

…with a Wide and Complementary Offer

Healthcare

From

A Customer-Centric Organization

To

Product-oriented company

Customer-centric

organization

Vendor: proactive and reactive sales of products to meet contingent Customer needs

Partner: long term relationship with Customers to fulfill unexpressed needs and to achieve new endeavors

Datalogic's offer along the value chain

New One DATALOGIC Group Organization

*The newco Solution Net System Inc. is the result from the spin-off of the Systems Business Unit.

A clear new strategy

THE OBJECTIVE THE SCOPE THE ADVANTAGE

Keep on constantly growing, above market average, while significantly improving profitability

Remain a product company with new emphasis on solutions to satisfy the needs of End Users in the following Industries: Retail, Healthcare, T&L and Manufacturing

Become a significant player in North America and further establish in APAC with a growing presence in China

Consolidate our position in EMEA

Moving from a product to a Customer-centric Company, leveraging on our wide range of products that is able to fulfill our customers' needs for both data collection and process automation and providing end-to-end solutions across the entire flow of operations

New products

Product Innovation and Development

• New product development process that starts from the Customers' needs – 1st milestone of the new product development
• A large and growing portfolio of more than 1,200 patents and pending patent applications
• About 300 pending patent applications in all jurisdictions
• In 2016 24.3% of revenues from new products*
• 10 Research & Development Centers
• Around 470 people employed in R&D, of which more than 400 Engineers

* Are considered new products the products announced in the last 24 months

Portal Scanning

Market split by Technology

Datalogic can offer all the technologies available for products identification

Market Value: \$4.0 Bn

includes only Hand Held Scanners, Industrial Stationary Scanners and Point of Sale Check Out

Q1 2017 New Products

Picture	Product name	Description
	PowerScan Retail	The new PowerScan 9500 Retail series targets the most demanding POS check out environments, where the handheld scanner is used to compliment fixed scanners, bottom-of-the-basket items, loyalty cards and capable of reading 2D bar codes from Smartphones. The outstanding robustness and higher depth of field create the ideal solution for Grocery, Hypermarket/ Superstore, Cash & Carry, Wholesalers and Home Improvement stores
	RFID solution	Datalogic enters the RFID market with a full range of products: Buetooth® Reader, Desktop Reader, Temperature Logger for the following target markets: • Retail non-food: Product localization, real-time inventory and security checkout in apparel, footwear and accessories • Transportation & Logistics: Manual or automatic inventory restocking, Shipping/Receiving, Luggage sorting at airports • Healthcare: Pharmaceuticals and blood traceability • Manufacturing: Automatic detection on conveyor belts
	Impact 11.10 release	A new version of the powerful IMPACT software, version 11.10, that increases performance and capabilities of the Pattern Sorting Tool (PST), a unique machine vision tool able to recognize thousands of products. Product Identification in Manufacturing: Bar codes are not present or visible at every single stage of the production process. The PST provides identification without bar codes enabling full product traceability, quality and safety. Product Identification in Logistics: In automated warehouses and distribution centers, the PST enables the safe handling of hazardous materials and reduces incorrect shipment rates enabling HazMat label detection and cross-check applications
	MATRIX 300N™ POLARIZED	MATRIX 300N™ POLARIZED, an ultra-compact 2D imager featuring a built-in polarizing filter. The Matrix 300N™ Polarized is ideal for Electronics, Automotive and Packaging industries. It is a top performing, compact 2D imager offering extreme reading performance at high speed and in DPM applications.

Q2 2017 New Products 2/2

	Picture	Product name	Description
		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
		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.
		MATRIX 120™	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™ DE2012-WA-DL	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.

Financials

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

Sound profitability growth

€ mln	Q2 2017	Q2 2016	Var%
Revenues	157.8	146.5	7.7%
Gross Operating Margin	76.1	68.9	10.5%
%on Revenues	48.2%	47.0%
Operating expenses	(48.7)	(47.8)	1.8%
%on Revenues	(30.9%)	(32.7%)
EBITDA	31.1	26.1	18.8%
Ebitda margin	19.7%	17.8%
EBIT	25.9	21.1	22.9%
Ebit margin	16.4%	14.4%

• Revenues up 7.7% to € 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	47.5%	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 revenues from 8.6%
EBITDA	51.8	45.0	15.3%		to 8.8%
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	11.9%	▪	Forex and higher gross
% on Revenues	9.8%	9.3%			debt 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%

REVENUES Best quarter in Datalogic history

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%
North America 30%	APAC 13% Latin America 4%		EMEA 53%

• 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

EBITDA BY DIVISION

	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

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

Consolidated Balance Sheet

	Dec 2016	Jun 2017		Dec 2016	Jun 2017
Total Fixed Assets	371.7	354.0	Net Financial Position	(3.5)	(5.5)
Trade receivables	75.5	87.1
% on 12m rolling sales	13.1%	14.7%
Inventories	82.3	88.5
% on 12m rolling sales	14.3%	14.9%
Trade payables	(104.6)	(105.4)	Net Equity	336.4	330.2
% on 12m rolling sales	-18.1%	-17.7%
Trade Working Capital	53.2	70.2
% on 12m rolling sales	9.2%	11.8%
Other assets/liabilities	(92.1)	(99.4)
Net Invested Capital	332.9	324.8	Total Sources	332.9	324.8

Net Debt Analysis: December'16 – June'17

€ mln

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

Via Candini, 2 40012 Lippo di Calderara di Reno Bologna – Italy

NEXT EVENTS

October 9-10, 2017 STAR Conference 2017, London

November 13th, 2017 9M results

DATALOGIC ON LINE

www.datalogic.com