WESTFORD, Mass., Feb. 15, 2018 (GLOBE NEWSWIRE) -- Kadant Inc. (NYSE:KAI) reported its financial results for the fourth quarter and fiscal year ended December 30, 2017.

Fourth Quarter Financial Highlights

  • Revenue increased 49% to $149 million
  • Gross margin was 43.3% 
  • GAAP diluted EPS decreased to $0.07 compared to $0.69 in 2016
  • Adjusted diluted EPS increased 65% to $1.14
  • Net income decreased to $0.8 million compared to $8 million in 2016
  • Adjusted EBITDA increased 88% to $26 million
  • Bookings increased 29% to a record $147 million
  • Cash flows from operations increased 102% to a record $33 million

Fiscal Year Financial Highlights

  • Revenue increased 24% to a record $515 million
  • Gross margin was 44.9%
  • GAAP diluted EPS decreased 5% to $2.75
  • Adjusted diluted EPS increased 45% to a record $4.49
  • Net income decreased 3% to $31 million
  • Adjusted EBITDA increased 47% to a record $91 million
  • Bookings increased 29% to a record $521 million
  • Cash flows from operations increased 28% to a record $65 million

Note: Adjusted diluted EPS and adjusted EBITDA are non-GAAP measures that exclude certain items as detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.”

Management Commentary
“The momentum that began in the first half of 2017 continued through the fourth quarter and led to record performance for the year in revenue, cash flows from operations, adjusted EBITDA, and adjusted diluted EPS,” said Jonathan W. Painter, president and chief executive officer. “We had excellent performance by our newly acquired businesses, as well as strong internal growth from our existing businesses.

“Favorable market conditions in all our major geographic regions contributed to record bookings in the fourth quarter. In particular, our Fluid-Handling product line had strong double-digit bookings growth in most geographic regions, and bookings for our parts and consumables increased over 30% to a record $90 million.

“While our GAAP diluted EPS was negatively impacted by the recent tax reform legislation enacted in the U.S. requiring a one-time tax charge primarily associated with the deemed repatriation of our unremitted foreign earnings, our fourth quarter adjusted diluted EPS was up 65 percent. This strong finish to the year helped make 2017 the best year in our history.”

Fourth Quarter 2017 Financials
Revenue increased 49 percent to $149.1 million compared to the fourth quarter of 2016, including $26.9 million from acquisitions and a $5.0 million increase from the favorable effect of foreign currency translation. Excluding the impact of acquisitions and foreign currency translation, revenue was up 17 percent compared to the fourth quarter of 2016. Gross margin was 43.3 percent, including a negative 120 basis point impact from the amortization of acquired profit in inventory. Net income was $0.8 million, or $0.07 per diluted share, compared to $7.7 million, or $0.69 per diluted share, in the fourth quarter of 2016. Adjusted diluted EPS increased 65 percent to $1.14 in the fourth quarter of 2017, compared to $0.69 in the fourth quarter of 2016. Adjusted diluted EPS in the fourth quarter of 2017 excludes $0.90 of discrete tax expense, $0.15 of amortization from acquired profit in inventory and backlog, $0.02 of acquisition costs, and $0.01 of restructuring costs. The discrete tax expense relates to the impact of the U.S. tax reform legislation enacted in December 2017. The largest component relates to tax expense for the deemed repatriation of unremitted foreign earnings. This was partially offset by a tax benefit related to adjusting U.S. deferred taxes to the lower enacted tax rate.

Adjusted EBITDA increased 88 percent to $26.5 million compared to $14.1 million in the fourth quarter of 2016. Adjusted EBITDA excludes $2.3 million of amortization from acquired profit in inventory and backlog, $0.4 million of acquisition costs, and $0.2 million of restructuring costs in the fourth quarter of 2017. Cash flows from operations increased to $32.8 million compared to $16.3 million in the fourth quarter of 2016. Bookings increased 29 percent to $146.6 million compared to $113.6 million in the fourth quarter of 2016 and includes $29.6 million from acquisitions and a $4.8 million increase from the favorable effect of foreign currency translation. Excluding the impact of acquisitions and foreign currency translation, bookings decreased one percent compared to the fourth quarter of 2016.

Fiscal Year 2017 Financials 
Revenue increased 24 percent to a record $515.0 million compared to 2016, including $69.4 million from acquisitions and a $3.8 million increase from the favorable effect of foreign currency translation. Excluding the impact of acquisitions and foreign currency translation, revenue was up 7 percent compared to 2016. Gross margin was 44.9 percent, including a negative 100 basis point impact from the amortization of acquired profit in inventory. Net income was $31.1 million, or $2.75 per diluted share, compared to $32.1 million, or $2.88 per diluted share, in 2016. Adjusted diluted EPS increased 45 percent to $4.49 in 2017, compared to $3.10 in 2016. Adjusted diluted EPS in 2017 excludes $0.90 of discrete tax expense, $0.43 of amortization from acquired profit in inventory and backlog, $0.39 of acquisition costs, and $0.01 of restructuring costs. Adjusted diluted EPS in 2016 excludes $0.15 of acquisition costs, $0.12 of amortization from acquired profit in inventory and backlog, a $0.02 gain on the sale of assets, and a $0.02 benefit from discrete tax items.

Adjusted EBITDA increased 47 percent to $90.8 million compared to $61.9 million in 2016. Adjusted EBITDA excludes $6.6 million of amortization from acquired profit in inventory and backlog, $5.4 million of acquisition costs, and $0.2 million of restructuring costs in 2017. Adjusted EBITDA excludes $1.9 million of amortization from acquired profit in inventory and backlog, $1.8 million of acquisition costs, and other income of $0.3 million in 2016. Cash flows from operations increased 28 percent to $65.2 million in 2017 compared to $51.0 million in 2016. Bookings increased 29 percent to a record $521.2 million compared to $403.5 million in 2016 and includes $62.7 million from acquisitions and a $2.2 million increase from the favorable effect of foreign currency translation. Excluding the impact of acquisitions and foreign currency translation, bookings increased 13 percent compared to 2016.

Summary and Outlook
“The favorable economic conditions in most parts of the world and our solid bookings trend puts us in a strong position for 2018,” Mr. Painter continued. “Our integration activities with our recent acquisitions are progressing well, and we are encouraged by the potential for a positive capital investment environment in the U.S. created by the enactment of the Tax Cuts and Jobs Act.

“We expect 2018 to be a record year for both revenue and diluted EPS driven by solid internal growth, as well as contributions from our recent acquisitions. Based on our current visibility, we expect to report full year GAAP diluted EPS of $4.74 to $4.84 on revenue of $605 million to $615 million. The 2018 guidance includes pre-tax restructuring costs of $1.7 million, or $0.11 per diluted share, discrete tax expense of $0.9 million, or $0.08 per diluted share, and pre-tax amortization expense associated with acquired backlog of $0.2 million, or $0.02 per diluted share. Excluding these expenses, we expect adjusted diluted EPS of $4.95 to $5.05 for 2018. For the first quarter of 2018, we expect GAAP diluted EPS of $0.77 to $0.81 on revenue of $143 million to $146 million. The first quarter of 2018 guidance includes pre-tax restructuring costs of $1.1 million, or $0.07 per diluted share, discrete tax expense of $0.9 million, or $0.08 per diluted share, and pre-tax amortization expense associated with acquired backlog of $0.2 million, or $0.02 per diluted share. Excluding these expenses, we expect adjusted diluted EPS of $0.94 to $0.98 for the first quarter of 2018.”

Conference Call
Kadant will hold a webcast with a slide presentation for investors on Friday, February 16, 2018, at 11:00 a.m. eastern time to discuss its fourth quarter and fiscal year 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 3567656. 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. A replay of the webcast will be available on our website through March 16, 2018.

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

Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including increases or decreases in revenue excluding the effect of acquisitions and foreign currency translation, adjusted operating income, adjusted net income, adjusted diluted EPS, adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA), and adjusted EBITDA margin. 

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our core business, operating results, or future outlook. We believe that the inclusion of such measures helps investors to gain an understanding of our underlying operating performance and future prospects, consistent with how management measures and forecasts our performance, especially when comparing such results to previous periods or forecasts and to the performance of our competitors. Such measures are also used by us in our financial and operating decision-making and for compensation purposes. We also believe this information is responsive to investors' requests and gives them an additional measure of our performance.
           
The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for the results of operations prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release have limitations associated with their use as compared to the most directly comparable GAAP measures, in that they may be different from, and therefore not comparable to, similar measures used by other companies.

Revenue included $26.9 million and $69.4 million from acquisitions in the fourth quarter and fiscal year 2017, respectively. Revenue also included $5.0 million and $3.8 million favorable foreign currency translation effects in the fourth quarter and fiscal year 2017, respectively. We present increases or decreases in revenue excluding the effect of acquisitions and foreign currency translation to provide investors insight into underlying revenue trends.                    

Adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted diluted EPS exclude acquisition costs, restructuring costs, other income, and expense related to acquired profit in inventory and backlog. Adjusted net income and adjusted diluted EPS also exclude discrete tax items. All these items are excluded as they are not indicative of our core operating results and are not comparable to other periods, which have differing levels of incremental costs or income or none at all.

Fourth Quarter
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin in the fourth quarter of 2017 exclude:

  • Pre-tax expense related to acquired profit in inventory and backlog of $2.3 million.
  • Pre-tax acquisition costs of $0.4 million.
  • Pre-tax restructuring costs of $0.2 million.

Adjusted net income and adjusted diluted EPS in the fourth quarter of 2017 exclude:

  • After-tax restructuring costs of $0.2 million.
  • After-tax acquisition costs of $0.2 million ($0.4 million net of tax of $0.2 million).
  • After-tax expense related to acquired profit in inventory and backlog of $1.7 million ($2.3 million net of tax of $0.6 million).
  • Discrete tax expense of $10.2 million related to U.S. tax legislation enacted in December 2017. The largest component is tax expense for the deemed repatriation of unremitted foreign earnings. This was partially offset by a tax benefit related to adjusting U.S. deferred taxes to the lower enacted tax rate.

Full Year
Adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin exclude:

  • Pre-tax restructuring costs of $0.2 million in 2017 and a gain on the sale of assets of $0.3 million in 2016.
  • Pre-tax acquisition costs of $5.4 million and $1.8 million in 2017 and 2016, respectively.
  • Pre-tax expense related to acquired profit in inventory and backlog of $6.6 million and $1.9 million in 2017 and 2016, respectively.

Adjusted net income and adjusted diluted EPS exclude:

  • After-tax restructuring costs of $0.2 million in 2017 and after-tax gain on the sale of assets of $0.2 million ($0.3 million net of tax of $0.1 million) in 2016.
  • After-tax acquisition costs of $4.5 million ($5.4 million net of tax of $0.9 million) in 2017 and $1.6 million ($1.8 million net of tax of $0.2 million) in 2016.
  • After-tax expense related to acquired profit in inventory and backlog of $4.9 million ($6.6 million net of tax of $1.7 million) in 2017 and $1.4 million ($1.9 million net of tax of $0.5 million) in 2016.
  • Discrete tax expense of $10.2 million in 2017 and a discrete tax benefit of $0.3 million in 2016. The benefit from discrete tax items in 2016 was primarily due to the reversal of valuation allowances on certain deferred tax assets in the U.S.

Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in this press release.

         
               
Financial Highlights (unaudited)       
(In thousands, except per share amounts and percentages)       
         
  Three Months Ended Twelve Months Ended
Consolidated Statement of IncomeDec. 30, 2017 Dec. 31, 2016 Dec. 30, 2017 Dec. 31, 2016
         
Revenues$149,140  $100,241  $515,033  $414,126 
         
Costs and Operating Expenses:       
 Cost of revenues 84,550   54,168   283,999   225,737 
 Selling, general, and administrative expenses 44,022   33,658   160,515   135,753 
 Research and development expenses 2,559   1,740   9,563   7,380 
 Restructuring costs and other income 203   -   203   (317)
   131,334   89,566   454,280   368,553 
         
Operating Income 17,806   10,675   60,753   45,573 
Interest Income 147   94   447   269 
Interest Expense (1,525)  (379)  (3,547)  (1,293)
         
Income from Continuing Operations Before Provision for Income Taxes 16,428   10,390   57,653   44,549 
Provision for Income Taxes 15,520   2,583   26,070   12,083 
         
Income from Continuing Operations 908   7,807   31,583   32,466 
         
Income from Discontinued Operation, Net of Tax -   -   -   3 
         
Net Income 908   7,807   31,583   32,469 
         
Net Income Attributable to Noncontrolling Interest (148)  (74)  (491)  (392)
         
Net Income Attributable to Kadant$760  $7,733  $31,092  $32,077 
         
Earnings per Share Attributable to Kadant:       
 Basic$0.07  $0.71  $2.83  $2.95 
 Diluted$0.07  $0.69  $2.75  $2.88 
         
Weighted Average Shares:       
 Basic 11,007   10,915   10,991   10,869 
 Diluted 11,402   11,236   11,312   11,149 
         
     
  Three Months Ended Three Months Ended
Adjusted Net Income and Adjusted Diluted EPS (a)Dec. 30, 2017 Dec. 30, 2017 Dec. 31, 2016 Dec. 31, 2016
         
Net Income and Diluted EPS Attributable to Kadant, as Reported$760  $0.07  $7,733  $0.69 
Adjustments for the Following:       
 Restructuring Costs, Net of Tax 154   0.01   -   - 
 Acquisition Costs, Net of Tax 184   0.02   -   - 
 Amortization of Acquired Profit in Inventory and Backlog, Net of Tax 1,667   0.15   -   - 
 Discrete Tax Items (b) 10,205   0.90   -   - 
         
Adjusted Net Income and Adjusted Diluted EPS$12,970  $1.14  $7,733  $0.69 
         
  Twelve Months Ended Twelve Months Ended
  Dec. 30, 2017 Dec. 30, 2017 Dec. 31, 2016 Dec. 31, 2016
         
Net Income and Diluted EPS Attributable to Kadant, as Reported$31,092  $2.75  $32,077  $2.88 
Net Income and Diluted EPS from Discontinued Operation -   -   (3)  - 
         
Net Income and Diluted EPS from Continuing Operations 31,092   2.75   32,074   2.88 
Adjustments for the Following:       
 Restructuring Costs and Other Income, Net of Tax 154   0.01   (247)  (0.02)
 Acquisition Costs, Net of Tax 4,458   0.39   1,625   0.15 
 Amortization of Acquired Profit in Inventory and Backlog, Net of Tax 4,858   0.43   1,359   0.12 
 Discrete Tax Items (b) 10,205   0.90   (261)  (0.02)
         
Adjusted Net Income and Adjusted Diluted EPS$50,767  $4.49  $34,550  $3.10 
         
         
        Increase
        Excluding
  Three Months Ended Increase Acquisitions
Revenues by Product LineDec. 30, 2017 Dec. 31, 2016  and FX (a,c)
         
Stock-Preparation$54,442  $39,220  $15,222  $12,718 
Doctoring, Cleaning, & Filtration 26,710   25,564   1,146   377 
Fluid-Handling 31,037   21,241   9,796   3,489 
         
 Papermaking Systems 112,189   86,025   26,164   16,584 
 Wood Processing Systems 34,003   11,413   22,590   299 
 Fiber-Based Products 2,948   2,803   145   145 
         
  $149,140  $100,241  $48,899  $17,028 
         
        Increase
        Excluding
  Twelve Months Ended Increase Acquisitions
  Dec. 30, 2017 Dec. 31, 2016  and FX (a,c)
         
Stock-Preparation$193,838  $171,378  $22,460  $7,320 
Doctoring, Cleaning, & Filtration 109,631   105,938   3,693   3,673 
Fluid-Handling 104,136   89,145   14,991   6,216 
         
 Papermaking Systems 407,605   366,461   41,144   17,209 
 Wood Processing Systems 95,053   36,850   58,203   8,886 
 Fiber-Based Products 12,375   10,815   1,560   1,560 
         
  $515,033  $414,126  $100,907  $27,655 
         
         
        Increase
        Excluding
  Three Months Ended Increase Acquisitions
Revenues by Geography (d)Dec. 30, 2017 Dec. 31, 2016  and FX (a,c)
         
North America$68,391  $47,430  $20,961  $2,133 
Europe 44,816   29,622   15,194   5,438 
Asia 24,785   17,247   7,538   6,479 
Rest of World 11,148   5,942   5,206   2,978 
         
  $149,140  $100,241  $48,899  $17,028 
         
         
        Increase
        (Decrease)
        Excluding
  Twelve Months Ended Increase Acquisitions
  Dec. 30, 2017 Dec. 31, 2016  and FX (a,c)
         
North America$238,483  $203,063  $35,420  $(1,191)
Europe 157,994   115,233   42,761   14,171 
Asia 78,443   62,703   15,740   16,178 
Rest of World 40,113   33,127   6,986   (1,503)
         
  $515,033  $414,126  $100,907  $27,655 
         
         
        Increase
        (Decrease)
        Excluding
  Three Months Ended Increase (Decrease) Acquisitions
Bookings by Product LineDec. 30, 2017 Dec. 31, 2016  and FX (c)
         
Stock-Preparation$50,435  $55,648  $(5,213) $(7,658)
Doctoring, Cleaning, & Filtration 26,715   23,923   2,792   1,962 
Fluid-Handling 30,689   19,360   11,329   5,265 
         
 Papermaking Systems 107,839   98,931   8,908   (431)
 Wood Processing Systems 35,076   11,202   23,874   (1,224)
 Fiber-Based Products 3,704   3,477   227   227 
         
  $146,619  $113,610  $33,009  $(1,428)
         
         
        Increase
        Excluding
  Twelve Months Ended Increase Acquisitions
  Dec. 30, 2017 Dec. 31, 2016  and FX (c)
         
Stock-Preparation$199,720  $158,876  $40,844  $27,119 
Doctoring, Cleaning, & Filtration 113,069   110,064   3,005   3,353 
Fluid-Handling 110,441   85,696   24,745   16,297 
         
 Papermaking Systems 423,230   354,636   68,594   46,769 
 Wood Processing Systems 85,248   38,183   47,065   3,974 
 Fiber-Based Products 12,703   10,641   2,062   2,062 
         
  $521,181  $403,460  $117,721  $52,805 
         
 
  Three Months Ended Twelve Months Ended
Business Segment InformationDec. 30, 2017 Dec. 31, 2016 Dec. 30, 2017 Dec. 31, 2016
         
Gross Margin:       
Papermaking Systems 45.6%  46.7%  46.7%  45.9%
 Wood Processing Systems 34.8%  39.4%  36.3%  41.0%
 Fiber-Based Products 54.5%  48.5%  51.2%  46.4%
         
   43.3%  46.0%  44.9%  45.5%
         
Operating Income:       
 Papermaking Systems$19,668  $12,680  $72,600  $57,427 
 Wood Processing Systems 3,494   2,921   9,690   8,327 
 Corporate and Other (5,356)  (4,926)  (21,537)  (20,181)
         
  $17,806  $10,675  $60,753  $45,573 
         
Adjusted Operating Income (a, e):       
 Papermaking Systems$20,065  $12,680  $73,590  $60,601 
 Wood Processing Systems 5,930   2,921   20,853   8,327 
 Corporate and Other (5,356)  (4,926)  (21,537)  (19,914)
         
  $20,639  $10,675  $72,906  $49,014 
Capital Expenditures:       
 Papermaking Systems$7,792  $2,163  $14,359  $5,504 
 Corporate and Other 771   62   2,922   300 
         
  $8,563  $2,225  $17,281  $5,804 
         
 
  Three Months Ended Twelve Months Ended
Cash Flow and Other DataDec. 30, 2017 Dec. 31, 2016 Dec. 30, 2017 Dec. 31, 2016
         
Cash Provided by Continuing Operations$32,836  $16,261  $65,164  $51,000 
Depreciation and Amortization Expense 6,319   3,392   19,375   14,326 
         
Balance Sheet Data    Dec. 30, 2017 Dec. 31, 2016
         
Assets       
Cash, Cash Equivalents, and Restricted Cash    $76,846  $73,569 
Accounts Receivable, net     89,624   65,963 
Inventories     84,933   54,951 
Unbilled Contract Costs and Fees     2,374   3,068 
Other Current Assets     12,246   9,799 
Property, Plant and Equipment, net     79,723   47,704 
Intangible Assets     133,036   52,730 
Goodwill     268,001   151,455 
Other Assets     14,311   11,452 
         
      $761,094  $470,691 
Liabilities and Stockholders' Equity       
Accounts Payable    $35,461  $23,929 
Long-term Debt     237,011   61,494 
Capital Lease Obligations     5,069   4,917 
Other Liabilities     151,049   96,072 
 Total Liabilities     428,590   186,412 
 Stockholders' Equity     332,504   284,279 
         
      $761,094  $470,691 
         
 
Adjusted Operating Income and Adjusted EBITDAThree Months Ended Twelve Months Ended
ReconciliationDec. 30, 2017 Dec. 31, 2016 Dec. 30, 2017 Dec. 31, 2016
         
Consolidated       
 Net Income Attributable to Kadant$760  $7,733  $31,092  $32,077 
 Net Income Attributable to Noncontrolling Interest 148   74   491   392 
 Income from Discontinued Operation, Net of Tax -   -   -   (3)
 Provision for Income Taxes 15,520   2,583   26,070   12,083 
 Interest Expense, net 1,378   285   3,100   1,024 
         
 Operating Income 17,806   10,675   60,753   45,573 
 Restructuring Costs and Other Income 203   -   203   (317)
 Acquisition Costs (f) 373   -   5,375   1,832 
 Acquired Backlog Amortization (g) 480   -   1,438   1,468 
 Acquired Profit in Inventory (h) 1,777   -   5,137   458 
         
 Adjusted Operating Income (a) 20,639   10,675   72,906   49,014 
 Depreciation and Amortization 5,839   3,392   17,937   12,858 
         
 Adjusted EBITDA (a)$26,478  $14,067  $90,843  $61,872 
         
 Adjusted EBITDA Margin (a, i) 17.8%  14.0%  17.6%  14.9%
         
Papermaking Systems       
 Operating Income$19,668  $12,680  $72,600  $57,427 
 Restructuring costs and other income 203   -   203   (317)
 Acquisition Costs (f) 124   -   611   1,565 
 Acquired Backlog Amortization (g) -   -   -   1,468 
 Acquired Profit in Inventory (h) 70   -   176   458 
         
 Adjusted Operating Income (a) 20,065   12,680   73,590   60,601 
 Depreciation and Amortization 3,134   2,686   11,239   10,045 
         
 Adjusted EBITDA (a)$23,199  $15,366  $84,829  $70,646 
         
Wood Processing Systems       
 Operating Income$3,494  $2,921  $9,690  $8,327 
 Acquisition Costs (f) 249   -   4,764   - 
 Acquired Backlog Amortization (g) 480   -   1,438   - 
 Acquired Profit in Inventory (h) 1,707   -   4,961   - 
         
 Adjusted Operating Income (a) 5,930   2,921   20,853   8,327 
 Depreciation and Amortization 2,530   544   6,077   2,188 
         
 Adjusted EBITDA (a)$8,460  $3,465  $26,930  $10,515 
         
Corporate and Other       
 Operating Loss$(5,356) $(4,926) $(21,537) $(20,181)
 Acquisition Costs (f) -   -   -   267 
         
 Adjusted Operating Loss (a) (5,356)  (4,926)  (21,537)  (19,914)
 Depreciation and Amortization 175   162   621   625 
         
 Adjusted EBITDA (a)$(5,181) $(4,764) $(20,916) $(19,289)
         
         
(a) Represents a non-GAAP financial measure.       
         
(b)Discrete tax items in 2017 relate to U.S. tax legislation enacted in December 2017 and discrete tax items in 2016 primarily relate to the reversal of valuation allowances on certain deferred tax assets in the U.S.
  
(c)Represents the increase (decrease) resulting from the exclusion of acquisitions and from the conversion of current period amounts reported in local currencies into U.S. dollars at the exchange rate of the prior period compared to the U.S. dollar amount reported in the prior period.   
  
(d)Geographic revenues are attributed to regions based on customer location.
  
(e)See reconciliation to the most directly comparable GAAP financial measure under "Adjusted Operating Income and Adjusted EBITDA Reconciliation."
  
(f)Represents transaction costs associated with our acquisitions.
  
(g)Represents intangible amortization expense associated with acquired backlog. 
  
(h)Represents expense within cost of revenues associated with acquired profit in inventory. 
   
(i)Calculated as adjusted EBITDA divided by revenue in each period. 
 
  

About Kadant 
Kadant Inc. is a global supplier of high-value, critical components and engineered systems used in process industries worldwide. The Company’s products, technologies, and services play an integral role in enhancing process efficiency, optimizing energy utilization, and maximizing productivity in resource-intensive industries. Kadant is based in Westford, Massachusetts, with 2,400 employees in 20 countries worldwide. For more information, visit www.kadant.com.

Safe Harbor Statement
The following constitutes a “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains forward-looking statements that involve a number of risks and uncertainties, including forward-looking statements about our future financial and operating performance, demand for our products, and economic and industry outlook. These forward-looking statements represent Kadant’s expectations as of the date of this press release. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results to differ materially from these forward-looking statements as a result of various important factors, including those set forth under the heading "Risk Factors" in Kadant’s annual report on Form 10-K for the year ended December 31, 2016 and subsequent filings with the Securities and Exchange Commission. These include risks and uncertainties relating to adverse changes in global and local economic conditions; the variability and difficulty in accurately predicting revenues from large capital equipment and systems projects; the variability and uncertainties in sales of capital equipment in China; currency fluctuations; our customers’ ability to obtain financing for capital equipment projects; changes in government regulations and policies; the oriented strand board market and levels of residential construction activity; development and use of digital media; price increases or shortages of raw materials; dependence on certain suppliers; international sales and operations; economic conditions and regulatory changes caused by the United Kingdom’s likely exit from the European Union; disruption in production; our acquisition strategy; our internal growth strategy; competition; soundness of suppliers and customers; our effective tax rate; future restructurings; soundness of financial institutions; our debt obligations; restrictions in our credit agreement; loss of key personnel; reliance on third-party research; protection of patents and proprietary rights; failure of our information systems or breaches of data security; fluctuations in our share price; and anti-takeover provisions.

Contacts
Investor Contact Information:
Michael McKenney, 978-776-2000
mike.mckenney@kadant.com
or
Media Contact Information:
Wes Martz, 269-278-1715
wes.martz@kadant.com

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