Datalogic — Investor Presentation 2019

Nov 14, 2019

9M 2019 Results Conference Call

14 NOVEMBER 2019

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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9M 2019 Results in line with guidance

9M 2019 Results

Q3 2019 Results

REVENUES €156.8 (-1.4%)

Key Facts

• Results in line with guidance with revenues declining 1% compared to last year. Despite tough market conditions revenues grew in North America.
• Vitality index improved from 13.8% in 9M2018 to 20.8% in 9M2019, accelerating to 22.0% in Q3 2019 mainly driven by Mobile Computing.
• T&L growing organically double digit at +14.2% and HC at +7.1% in 9M2019. Retail declining. Solid performance of Manufacturing in Q3 in a declining market.
• Gross Margin almost flat at 48.4%, improved by 0.6% net of FX.
• EBITDA margin at 16.6% net of FX, after cost management.
• R&D investment at 10.3% on revenues compared to 10.1% last year, in line with the innovation priorities.

Group Revenues Breakdown

DL Business: Substantially in line with 9M 2018 (-0.6%); growth in T&L and HC, partially offsetting the decline of RTL and MFG performance in LA and APAC.

• Retail: Tough comparison with the previous year due to major Fixed Retail Scanner rollouts with large clients in EMEAI and NA in 2018. Positive
• Manufacturing: Slowdown continued in automotive (EMEAI) and consumer electronics (China), partially offset by double digit growth in US.
  -

T&L: Double digit growth driven by a strong performance in NA and EMEAI. Healthcare: Positive performance with double digit growth in EMEAI and NA.

€ m	9M 2019	9M 2018	Var % vs. 9M 2018	Constant FX
Retail	196,7	203,2	(3,2%)	(6,3%)
Manufacturing	118,1	125,3	(5,7%)	(7,2%)
Transportation & Logistics	58,3	49,6	17,6%	14,2%
Healthcare	15,0	13,6	10,6%	7,1%
Channel (Unallocated)	40,5	39,4	2,6%	1,0%
Total DL Business	428,6	431,1	(0,6%)	(3,1%)
Solution Net Systems	21,7	22,4	(3,0%)	(8,7%)
Informatics	13,7	14,6	(6,3%)	(11,8%)
Intra division	(2,6)	(2,0)
Total Datalogic	461,4	466,1	(1,0%)	(3,8%)

Group Revenues by Geography

EMEAI: double digit growth in HC and T&L partially offsetting Retail downturn due to major FRS roll outs in 2018.

North America: Datalogic Business revenues show positive double digit growth across all verticals except Retail also impacted by FRS roll outs in 2018.

APAC: China still impacted by slow down in Manufacturing, partially offset by positive performance of Australia and Japan.

€ m	9M 2019	9M 2018	Var % vs. 9M 2018	Constant FX
EMEAI	233.4	240.4	(2.9%)	(3.5%)
North America	164.7	153.2	7.5%	1.2%
APAC	52.4	62.0	(15.5%)	(17.7%)
Latin America	10.8	10.5	2.9%	(0.3%)
Total Datalogic	461.4	466.1	(1.0%)	(3.8%)

• 3Q New product* net sales account for 22.0% of total sales improved from 15.2% in Q3 2018
• R&D expenses up 1.2% to €47.5 million vs 9M2018.
• strategy on innovation.

• DL Business R&D spending amounted to approximately 11% of DL Business turnover, in line with the Group's

Q3 New Product Launches and Innovation

* New Products: products launched in the last 24 months

Factory Automation		Solutions
Identification	Machine Vision
Matrix 300N 2MP Sensor	MX-E90 Vision Processor	Websentinel PLUS
Matrix 120/220 with Digimarc and	IMPACT 12.2 Software: focus on guidance

OPC UA

and traceability

Q3 2019 P&L

• Revenues down 1.4% to €156.8 m (-3.7% Net FX)
  • Double-digit growth in T&L (+24.6%)
  • Solid performance of Manufacturing in tough market;
  • Tough compare for the Retail industry affected by major roll outs in 2018;
• Gross Margin slightly positive Net of FX;
• Operating Expenses increase due to carry over effects of sales organization from last year;
• EBITDA down 4.1% to €25.6m (-3.9% Net FX) EBITDA margin at 16.3%, almost flat at constant FX;
• Net Profit at 9.2% on revenues in line with Q3 2018

	€ m	Q3 2019	Q3 2018	Variance Reported	Constant F X
Revenues		156.8	159.1	(1.4%)	(3.7%)
Gross Margin		75.7	77.3	(2.1%)
	%on Revenues	48.2%	48.6%	-0.3 pp	+0.2 pp
Operating expenses		(55.6)	(54.5)	2.0%
	%on Revenues	(35.4%)	(34.2%)	-1.2 pp	-1.3 pp
EBITDA		25.6	26.7	(4.1%)
	%Ebitda margin	16.3%	16.8%	-0.4 pp	-0.0 pp
Net Profit		14.4	14.6	(1.3%)
	%on Revenues	9.2%	9.2%	+0.0 pp	+0.3 pp
	EUR/USD FX Exchange Rate	1.11	1.16

9M 2019 P&L

€ m	9M 2019	9M 2018	Variance Reported	Constant F X	▪
Revenues	461.4	466.1	(1.0%)	(3.8%)	Revenues down 1.0% to €461.4 m (-3.8% Net FX); DL Business revenues at €428.6 m (-0.6%, -3.1% Net Fx)
Gross Margin % on Revenues	223.5 48.4%	226.7 48.6%	-0.2 pp	+0.6 pp	▪ Gross Margin almost flat at 48.4%, improved by 0.6% net of FX
Operating expenses	(166.3)	(160.3)			▪ Operating expenses to €166.3 m:
% on Revenues * EBITDA	(36.1%) 73.3	(34.4%) 77.5	-1.7 pp	-1.8 pp	✓ R&D on revenues increased from 10.1% to 10.3%;
% Ebitda margin EBIT	15.9% 52.0	16.6% 61.1	-0.8 pp	-0.0 pp	✓ S&D on revenues from 17.6% to 19.3% due to due to carry over effects of sales
% Ebit margin	11.3%	13.1%	-1.8 pp	-1.1 pp	organization from last year
Net Income	39.7	43.6			✓ G&A and other items at 7.0% on revenues,
% on Revenues	8.6%	9.3%	-0.7 pp	-0.1 pp	flat vs last year
EUR/USD FX Exchange Rate	1.12	1.19			▪ Net income at €39.7 m or 8.6% on revenues (almost flat Net FX vs last year)

EBITDA: 9M actual vs last year

€ m

* Excluding Service and other non significant items

Net Debt & Cash Flow Analysis : Dec'18 – Sep'19

NFP at 30 September 2018 equal to +€10.9 million

2019 Outlook

The positive performance of the Group's business in North America and growth in the turnover of new products confirm that the Group's strategy is solid. The particularly difficult economic situation in China and the slowdown to the main segments in which the Group operates in Europe, are expected to continue also in the fourth quarter.

Despite the uncertainty of the economic environment, the Group will continue to execute its new product development strategy, while keeping costs under control. In current market conditions, the Group expects to close the year substantially in line with the first nine months, save for any deferral of investment decisions by customers, which may impact the forecasted performance.

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

www.datalogic.com

DATALOGIC ON LINE

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