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WESTFORD, Mass.--Aug 1,2017---Kadant Inc. (NYSE: KAI) reported its financial results for the second quarter ended July 1, 2017. Second Quarter 2017 Highlights

GAAP diluted EPS decreased 4% to $0.72
Adjusted diluted EPS increased 18% to a record $1.04
Net income decreased 3% to $8 million
Adjusted EBITDA increased 5% to a record $19 million and represented 17% of revenue
Revenue decreased 1% to $110 million
Gross margin was 47.9%
Bookings increased 23% to a record $120 million
Cash flows from operations increased 73% to $24 million

Note: Adjusted diluted EPS, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP financial measures that exclude certain items as detailed later in this press release.

Management Commentary
“Following our strong first quarter of 2017, we had another outstanding quarter with record bookings, adjusted diluted EPS, and adjusted EBITDA,” said Jonathan Painter, president and chief executive officer of Kadant. “Our adjusted diluted EPS performance achieved a new milestone and was driven by a strong gross margin, which benefited from near-record parts and consumables revenue. Our adjusted diluted EPS excludes the costs related to our acquisition of the forest products business of NII FPG Company (NII), which we completed in early July. We are working hard on the integration of this business, which is proceeding quite well. The more we learn about NII and its management team the more optimistic we are about our future together.

“Our record bookings of $120 million in the second quarter extended our strong bookings performance beyond the previous two quarters and was led by our Stock-Preparation and Wood-Processing product lines, each of which achieved over 30 percent growth in bookings compared to the same period last year. From a geographic perspective, bookings in China and Europe were strong in the second quarter for both capital and parts and consumables products. Another highlight of the quarter was our cash flows from operations of $24 million, which were the second highest in our history.”

Second Quarter 2017 Results
Revenue decreased one percent compared to the second quarter of 2016 to $110.2 million, including a $2.7 million decrease from the unfavorable effect of foreign currency translation. Excluding the impact of foreign currency translation, revenue was up one percent compared to the second quarter of 2016. Gross margin was 47.9 percent. Net income was $8.1 million, or $0.72 per diluted share, compared to $8.3 million, or $0.75 per diluted share, in the second quarter of 2016, and included an $0.8 million, or $0.07 per diluted share, decrease from the unfavorable effects of foreign currency translation. Adjusted diluted EPS increased 18 percent to $1.04 in the second quarter of 2017, compared to $0.88 in the second quarter of 2016. Adjusted diluted EPS in the second quarter of 2017 excludes $0.32 of acquisition costs. Adjusted diluted EPS in the second quarter of 2016 excludes $0.12 of amortization from acquired profit in inventory and backlog and $0.01 of acquisition costs. Adjusted EBITDA increased five percent to $18.8 million compared to $17.9 million in the second quarter of 2016. Adjusted EBITDA excludes $4.1 million of acquisition costs in the second quarter of 2017 and $0.3 million of acquisition costs and $1.9 million from the amortization of acquired profit in inventory and backlog in the second quarter of 2016. Bookings increased 23 percent to a record $120.3 million compared to $98.1 million in the second quarter of 2016, including a $3.5 million decrease from the unfavorable effect of foreign currency translation.

Guidance
“We are increasing our guidance for the second half of 2017 due to both the improved outlook for our existing business, as well as the acquisition of NII,” Mr. Painter continued. “We expect to report full year revenue of $488 to $494 million, revised from our previous guidance of $427 to $437 million. We expect to achieve GAAP diluted EPS of $3.18 to $3.26 in 2017, revised from our previous guidance of $3.27 to $3.37. The revised 2017 guidance includes acquisition costs of $4.8 million, or $0.36 per diluted share, and amortization expense associated with acquired profit in inventory and backlog of $7.0 million, or $0.45 per diluted share. Excluding these acquisition-related expenses, we expect adjusted diluted EPS of $3.99 to $4.07 for 2017. For the third quarter of 2017, we expect GAAP diluted EPS of $0.83 to $0.87 on revenue of $139 to $142 million, including $0.02 of acquisition costs and $0.27 of amortization expense associated with acquired inventory and backlog. Excluding these acquisition-related expenses, we expect adjusted diluted EPS of $1.12 to $1.16 for the third quarter of 2017.”

Conference Call
Kadant will hold a webcast with a slide presentation for investors on Tuesday, August 1, 2017, at 4:30 p.m. eastern time to discuss its second quarter performance, as well as future expectations. To access the webcast, including the slideshow and accompanying audio, go to www.kadant.com and click on “Investors”. To listen to the webcast via teleconference, call 888-326-8410 within the U.S., or +1-704-385-4884 outside the U.S. and reference participant passcode 58886672. Prior to the call, our earnings release and the slides used in the webcast presentation will be filed with the Securities and Exchange Commission and will be available at www.sec.gov. An archive of the webcast presentation will be available on our website until September 1, 2017.

Shortly after the webcast, Kadant will post its updated general investor presentation incorporating the second quarter results on its website at www.kadant.com under the “Investors” section.

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