DCM's 3Q2018 earnings were better than expected due to a 320bp sequential improvement in operating (EBIT) margin, despite the seasonally slower revenue quarter and higher input costs. Drilling into these results further reveals several key points:
- Product mix was substantially better in print itself as well as the impact of a full quarter of Perennial, who's EBITDA margins I estimate to be north of 30% (see July 12, 2018 note). Combined these items drove a 60bp increase in margins, which overcame substantial input cost increases for paper and transport.
- Drilling further into print product mix