Datalogic — Investor Presentation 2019

Mar 21, 2019

STAR Conference Milano

21 MARCH 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.

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Corporate Overview

Global technology leader in the automatic data capture and process automation markets, in the Retail, Manufacturing, Transportation & Logistics, and Healthcare industries

Founded in 1972, listed on the Italian Stock Exchange since 2001

Datalogic at a glance

1200 patents filed and more than 350 in approval

10 Manufacturing and Repair facilities in: US, Brazil, Hungary, Slovakia, Italy, China, Vietnam and Australia

500 engineers in 11 R&D centers and 3 DL Labs in: Italy, USA, Vietnam, China, and Germany

3157 Employees in 27 countries: 21% Americas, 56% EMEA, 23% APAC

Over 45 years of Technological Innovation

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 (March 19, 2019): 23.55 Euro Market Cap (March 19, 2019): 1.38 B Euro Auditing Company: EY

Strategy

A Clear Strategy

Keep constantly growing above market average, while significantly improving profitability

Remain a product company with new emphasis on solutions satisfying the needs of the End-Users in the following industries: Retail, Manufacturing, Transportation&Logistics and Healthcare

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

Unique Positioning

• WIDE AND COMPLEMENTARY OFFER • CUSTOMER CENTRIC ORGANIZATION BY VERTICALS

Uniquely positioned to address customers' needs in both data capture and process automation along their entire value chain.

Total Addressable Market

• Fixed retail scanners #1 WW – 36.9% mkt share
• Stationary industrial scanners #1 WW – 24.1% market share
• Handheld Scanners #3 WW – 19.7% market share

DATALOGIC MKT SHARE

TAM: ~ 14 bln USD

We play in a growing market

• Datalogic products and solutions are essential for e-commerce, logistics automation and robotics
• applications
• There has never been a more exciting time as this to operate in the market we play in

Retail Bringing offline and online together

• We satisfy globally the Retailers business needs, from Distribution Center to Check Out and Shoppers' Home
• Market Leader along the Retail supply chain from 1974 with the first scanner in Troy, Ohio to 2018 with the NRF exhibition in New York with the innovative frictionless shopping
• New Data capture products for Ecommerce and multichannel

DATALOGIC PROPOSITION APPLICATIONS

Retail Bringing offline and online together

MARKET OUTLOOK

▪ Online retailers are opening brick-and-mortar stores, while traditional retailers are converting

▪ Retailers who collect customer data on every step of the journey are headed in the right direction

▪ Retail E-commerce sales worldwide posted solid gains in 2017, rising 23.2% to \$2.290 trillion *, but

• physical store locations into semi-distribution hubs
• 90% of transactions are still completed in-store
• Distribution Centers automatization increase
• commerce trend

▪ Retailers are looking for advanced logistics solutions to be able to satisfy the needs of the E-

* Source: eMarketer

Manufacturing The factory of the future

DATALOGIC PROPOSITION

• 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
• Expanding into Intralogistic solutions and Robotic/AGV guidance

APPLICATIONS

MARKET OUTLOOK

Manufacturing The factory of the future

• Market is booming
• Industry 4.0

• Robotics / AGV

• DPM / Extended Traceability and Quality Inspection ▪ New segments due to new technology (i.e. Electric car)

• Industry 4.0 is pushing for multi-technology adoption, product interoperability and enhancement self diagnostic capabilities
• The adoption of key digital technologies shows a strong growth over the next 5 years
• 267 Billion USD investment in the next 5 years directed towards IoT*
• The Industrial Robotics Market stands at 13.9 billion USD with an 11.8% growth **

* Source: IoT Analytics

** Source: International Federal of Robotics (IFR) data and Loup Ventures

DATALOGIC PROPOSITION

Transportation & Logistics End to end visibility and real time tracking

• We ensure Data Collection to Courier-Express-Parcels, Airports and Logistics
• 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

APPLICATIONS

Transportation & Logistics End to end visibility and real time tracking

MARKET OUTLOOK

▪ Growth is driven by E-commerce: high speed sorting, ability to manage any size of parcel, and high flexibility. E-Commerce is driving the industry growth

▪ Resolution 753 requires (from June 2018) IATA members to maintain an accurate inventory of baggage by monitoring the acquisition and delivery of baggage

▪ The baggage handling system market* is projected to reach USD 9.36 Billion by 2020, at a CAGR

• of 7.8% from 2015 to 2020
• Strong demand for solutions beyond barcode
• productivity, zero-defects, reducing manual operations

▪ Robotics & Automation: collaborative robots and automatic solutions to get higher

* Source: IATA

Healthcare Meet regulations and Higher Patient Safety

DATALOGIC PROPOSITION

• 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, Inductive charging technology for battery recharge, and Green spot good match to ensure positive medicine-patient identification

APPLICATIONS

Healthcare Meet regulations and Higher Patient Safety

MARKET OUTLOOK

▪ RTLS (Real Time Location System) - System used to provide immediate or real-time tracking and management of medical equipment, staff and patients within all types of patient care

• Drugs tracking to avoid counterfeit medications
• environments
• as well as those most at risk of returning

▪ Real-Time Location Systems market will be worth \$3.070 Billion by 2020 * ▪ RTLS healthcare market generated revenue of \$717.8 Million in 2015 and is projected to grow at 19.2% CAGR through 2021 **

▪ HC Emerging trends: Telemedicine/Telehealth. Health systems are more and more using digital health tools and telehealth platforms to better care for patients after they leave the hospital,

* Source: RFID Global Solution, Inc ** Source: PR Newswire

• Memor™ 10, new PDA validated for the Google™-led initiative "Android Enterprise Recommended" program for rugged devices.

• 24 New Product launched in 2018 (12 only in Q4).

• Main accomplishments:

• R&D investments reaching 9.8% on Revenues (10.2% on DL Business)

• New SLS launched
• Hired 90+ people in R&D, reaching 500 people
• Patents above 1,200 items; +53 IDs harvested in 2018

2018 New Product Launches and innovation

PowerScan PD9530 becomes PD9531

S3Z Miniature Sensor

AREX 400 family of Fiber Laser Marker

Financials & Outlook

Verticals Results

Retail: Double digit growth in NA thanks to projects on Fixed Retail Scanners and Mobile Computers

Manufacturing: Double digit growth in China & NA (Net FX) mainly driven by industrial barcode scanners

T&L: Double digit growth mainly driven by big projects in NA with TIER1 parcel companies

Healthcare: Decrease due to big projects in NA in 2017

Retail: Best quarter of the year driven by NA

Manufacturing: Double digit growth in NA partially offset by slow down in APAC

T&L: Slow down in all regions due to big projects phasing

Healthcare: Best quarter of the year with signs of recovery thanks to new project in NA

FY 2018

Q4 2018

% weight on Total	€ m	FY 2018	Var %	Net FX
50.4%	Retail	295.4	5.4%	8.0%
29.8%	Manufacturing	174.6	11.5%	13.1%
11.8%	Transportation & Logistic	69.2	13.6%	15.8%
3.5%	Healthcare	20.2	(28.6%)	(26.9%)
4.5%	* Channel (Unallocated)	26.3	(30.7%)	(30.3%)
100.0%	Total DL Business	585.7	3.9%	5.9%
92.8%	DL Business	585.7	3.9%	5.9%
4.5%	Solution Net Systems	28.3	14.5%	20.2%
3.1%	Informatics	19.6	(4.9%)	(0.5%)
(0.4%)	Adjustments	(2.6)
100.0%	Total Datalogic	631.0	4.1%	6.4%
% weight	€ m	Q4 2018	Var %	Net FX
on Total 52.5%	Retail	81.3	9.4%	8.0%
28.3%	Manufacturing	43.8	5.7%	5.4%
12.0%	Transportation & Logistic	18.6	(7.7%)	(8.7%)
4.2%	Healthcare	6.6	(5.7%)	(7.2%)
2.9%	Channel (Unallocated) *	4.4	31.0%	31.3%
100.0%	Total DL Business	154.7	5.8%	4.8%
93.8%	DL Business	154.7	5.8%	4.8%
3.6%	Solution Net Systems	5.9	8.5%	5.1%
3.0%	Informatics	5.0	17.9%	14.2%
(0.4%)	Adjustments	(0.6)

* Includes Revenues not directly allocated to the Verticals

Group Revenues by geography

EMEA: Declining trend entirely due to Retail; positive growth for T&L and Manufacturing

North America: Stellar performance in 2018 driven by double digit growth in Retail, T&L and Manufacturing (Net Fx)

APAC: Entirely driven by China (+13,9%) thanks to Manufacturing (+29,7%)

FY 2018

Q4 2018

% weight on Total	€ m	FY 2018	Var %	Net FX
50.9%	EMEA	320.9	(2.0%)	(1.6%)
32.6%	North America	205.6	13.8%	18.4%
13.8%	Asia Pacific	87.3	9.7%	13.3%
2.7%	Latin America	17.2	(5.3%)	2.0%
100.0%	Total Revenues	631.0	4.1%	6.4%

% weight on Total	€ m	Q4 2018	Var %	Net FX
50.2%	EMEA	82.9	(7.7%)	(7.9%)
32.1%	North America	52.9	33.9%	29.7%
14.0%	Asia Pacific	23.0	12.2%	11.7%
3.7%	Latin America	6.1	11.1%	14.7%
100.0%	Total Revenues	164.9	6.2%	5.1%

EMEA: Results impacted by Retail (mainly Italy) and T&L project seasonality

North America: Double digit growth driven by Retail

APAC: Positive trend due to Retail in APAC, slow down Manufacturing in China

Latin America: Growth driven by Retail

Q4 2018	Q4 2017	Var%
164.9	155.3	6.2%	▪ Acceleration in Q4 driven by NA +33.9% vs LY (+29.7% vs Net FX)
79.2	75.9	4.4%
			▪ Revenues up 6.2% to €164.9m (+5.1% Net FX)
48.0%	48.9%
(55.2)	(54.3)	1.8%	▪ Gross Margin up 4.4% to €79.2m.
(33.5%)	(34.9%)		▪ Operating expenses up by 1.8% to €55.2m.
28.0	25.4	10.3%
17.0%	16.4%		▪ EBITDA margin from 16.4% to 17.0% thanks to increase in Revenues compensating higher
22.4	20.4	9.9%	investments
13.6%	13.1%
1.14	1.18

Q4 2018 P&L

FY 2018 P&L

€ m	2018	2017	Var %
Revenues	631.0	606.0	4.1%
Gross Margin	306.0	288.4	6.1%
%on Revenues	48.5%	47.6%
Operating expenses	(215.6)	(199.8)	7.9%
%on Revenues	(34.2%)	(33.0%)
EBITDA	105.5	103.3	2.2%
%Ebitda margin	16.7%	17.0%
EBIT	83.5	82.9	0.8%
%Ebit margin	13.2%	13.7%
EBT	77.8	75.5	3.2%
Taxes	(15.6)	(15.4)
Net Income	62.2	60.1	3.5%
% on Revenues	9.9%	9.9%
Exchange Rate	1.18	1.13

%	▪ Revenues up 4 1 % to €631 0 m (+ 6 4 % at constant exchange rate)
	▪ Gross Margin showing steady improving trend at 48 5 % (around +90 bps vs 2017 )
	▪ Operating expenses up by 7 9 % to €215 6 m
	✓ R&D on revenues up to 9 8 % (10 2 % on DL Business)
	✓ S&D on revenues from 16 5 % to 17 8 % (+130 bps YoY) due to strengthening of commercial organization
	✓ G&A on revenues decreased by 7 9 % , moving from 7 4 % to 6 6 % on revenues
	▪ EBITDA margin at 16 7 % improved Gross Margin and volumes partially offsets higher R&D and
	Distribution expenses
	▪ EBT up by 3 2 % thanks to financial charges offsetting negative effect related to reorganization
	▪ Net income at €62 2 m up by 3 5 % thanks to slight

reduction on tax rate (20 . 1 % -30 bps vs 2017 )

Group EBITDA by division

▪ Solution Net Systems EBITDA substantially in line with 2017 (€ 2.9 m); EBITDA margin decreased by 110 bps due to Royal Mail

• Datalogic EBITDA increasing by 2.2% vs 2017
• big postal projects
• Informatics EBITDA improvement thanks to cost control and mix

		FY 2018
Division	EBITDA	EBITDA Margin	Var %
DL Business	102.1	17.4%	1.9%
Solution Net Systems	2.9	10.4%	3.0%
Informatics	0.7	3.4%	358.2%
Adjustments	(0.2)
Total Datalogic	105.5	16.7%	2.2%

EBITDA: actual vs last year

* Excluding Service and other non significant items

€m	2018 Dec 2018	2017 Dec 2017	€m	2018 Dec 2018	2017 Dec 2017
Total Fixed Assets	369.7	347.9	Net Financial Position	(23.8)	(30.1)
Trade receivables	90.4	85.8
% on 12m rolling sales	14.3%	14.2%
Inventories	95.8	85.9
% on 12m rolling sales	15.2%	14.2%
Trade payables	(117.1)	(110.3)	Net Equity	375.8	353.0
% on 12m rolling sales	-18.6%	-18.2%
Trade Working Capital	69.1	61.5
% on 12m rolling sales	11.0%	10.1%
Other assets/liabilities	(86.9)	(86.5)
Net Invested Capital	352.0	322.9	Total Sources	352.0	322.9

€m	2018 Dec 2018	2017 Dec 2017	€m	2018 Dec 2018
Total Fixed Assets	369.7	347.9	Net Financial Position	(23.8)
			Net Equity	375.8
Net Invested Capital	352.0	322.9	Total Sources	352.0

Consolidated Balance Sheet

Net Debt & Cash Flow Analysis : Dec'17 – Dec'18

2019 Outlook

Verticals

Group Financials

• Keep growth trend on Revenues
• Substantially stable EBITDA margin

• Maintain a strong Cash Generation from operations

• Focus on Innovation: increase R&D investment

• Commercial organization: Selective hiring in key areas NA and APAC
• Ramp up of new products launched in the last 12 months (ie: Shift to Android OS)
• Strong new products pipeline

▪ Retail: outlook remains very positive in NA; expected recovery in EMEA and APAC along the year thanks to new

▪ Manufacturing: NA as growth engine of 2019 thanks to increase in coverage

▪ T&L: maintain the pace in NA and leveraging cross selling thanks to new

• products
• products
• HC: back to growth
• the channel

▪ Channel: SMB expected recovery thanks to new products particularly suitable for

April 30, 2019 Shareholders' meeting

May 14, 2019 1Q 2019 Results

August 7, 2019 6M Results

November 13, 2019 9M Results

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

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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