Cash flow of $22 million was down 3% compared to Q2 of 2019, while free cash flow increased 2% to $21 million.
Our parts and consumables revenue made up 64% of total revenue comparable to the period -- to the prior year period.
After the initial surge in packaging and tissue demand early in the second quarter, these markets have returned to levels more indicative of the general economic environment.
While demand for our aftermarket parts was solid and made up 72% of total revenue in the quarter, customer delays in capital project execution, postponed service work and the inability of our employees to engage face-to-face with customers and prospects due to the pandemic negatively affected both our bookings and revenue performance.
Revenue in this segment declined 14% to $66 million year-over-year, but was up slightly compared to Q1 of this year.
Parts and consumables revenue, on the other hand, was solid and made up 62% of total revenue in the second quarter.
Encouragingly, U.S. housing starts in June were up 17% sequentially to $1.2 million, which followed a boost in May housing starts, up 14% compared to April.
As a result, lumber of prices for July delivery increased 8% above pre-pandemic high and demand is providing support for higher price levels.
Adjusted EBITDA increased 8% to $6 million and our adjusted EBITDA margin was nearly 18% in the second quarter as a result of solid execution and product mix.
Therefore, we will not be providing guidance at this time.
Our GAAP diluted earnings per share was $1 in the second quarter, down 30% compared to $1.42 in the second quarter of 2019.
Our GAAP diluted earnings per share in the second quarter includes $0.03 of restructuring costs and $0.03 of acquisition costs associated with our acquisition of Cogent, which was completed in June.
In addition, our second quarter results include pre-tax income of $2.1 million or $0.14 net of tax attributable to government-sponsored employee retention programs related to the pandemic.
Consolidated gross margins were 43.5% in the second quarter of 2020, up 150 basis points compared to 42% in the second quarter of 2019.
Approximately 80 basis points of the increase was due to the receipt of government-sponsored employee retention programs related to the pandemic and the remainder was due to the negative effect from the amortization of acquired profit in inventory that was included in the results for the second quarter of 2019.
Parts and consumables revenue, as a percentage of revenue, remained fairly consistent with the prior year at 64% in the second quarter of 2020 compared to 63% last year.
SG&A expenses were $45.1 million or 29.5% of revenue in the second quarter of 2020 compared to $48.5 million or 27.4% of revenue in the second quarter of 2019.
The $3.4 million decrease in SG&A expense included $1.1 million decrease from a favorable foreign currency translation effect and a $0.8 million benefit from government-sponsored employee retention programs.
Adjusted EBITDA decreased to $26.6 million or 17.4% of revenue compared to $32.7 million or 18.5% of revenue in the second quarter 2019 due to declines in profitability at our Flow Control segment, and to a lesser extent, our Industrial Processing segment.
Operating cash flows were $22 million in the second quarter 2020, which included a modest positive impact of $0.3 million from working capital compared to operating cash flows of $22.6 million in the second quarter of 2019.
We paid down debt by $13.8 million, paid $6.8 million for the acquisition of Cogent, paid a $2.8 million dividend on our common stock, and paid $0.9 million for capital expenditures.
Free cash flow increased significantly on a sequential basis to $21.1 million compared to $3.5 million in the first quarter of 2020 as our first quarter typically is the weakest of the year.
In addition, the second quarter of 2020 free cash flow was $0.5 million higher than the second quarter of 2019.
In the second quarter of 2020, GAAP diluted earnings per share was $1 and our adjusted diluted earnings per share was $1.06.
The $0.06 difference was due to $0.03 of acquisition expenses and $0.03 of restructuring costs.
In comparison, the second quarter of 2019, both our GAAP and adjusted duty diluted earnings per share was $1.42.
We had $0.10 of acquisition-related expenses, which were fully offset by a discrete tax benefit.
As shown in the chart, the decrease of $0.36 in adjusted diluted earnings per share in the second quarter 2020 compared to the second quarter of 2019 consists of the following; $0.71 due to lower revenues and $0.08 due to a higher effective tax rate.
These decreases were partially offset by $0.24 due to lower operating costs, $0.11 due to lower interest expense, and $0.08 due to higher gross margin percentages.
Collectively included in all the categories I just mentioned, was an unfavorable foreign currency translation effect of $0.05 in the second quarter of 2020 compared to the second quarter of last year due to the strengthening of the U.S. dollar.
Our cash conversion days, which we calculate by taking days in receivables plus days in inventory and subtracting days in accounts payable, was 128 at the end of the second quarter of 2020 compared to 117 at the end of the second quarter of 2019.
Working capital as a percentage of revenue was 14.8% in the second quarter of 2020 compared to 14.2% in the first quarter of 2020 and 15.4% in the second quarter of 2019.
Our net debt, that is debt less cash, decreased $11.1 million or 5% to $222 million at the end of the second quarter of 2020 compared to $233 million at the end of the first quarter of 2020.
We repaid $13.8 million of debt in the second quarter and have repaid $16.4 million of debt in the first six months of 2020.
After quarter end, we repaid our real estate loan, which had a remaining principal balance of $18.9 million by borrowing from our revolving credit facility.
This effectively swapped debt with an annual interest rate of 4.45% under the real estate loan for a revolver debt currently at 1.68%, which at current interest rates, would reduce interest expense by over $500,000 on an annual basis.
Our leverage ratio, calculated in accordance with our credit facility, decreased to 2.01 at the end of the second quarter 2020 compared to 2.03 at the end of 2019.
After repaying the real estate loan in July, we currently have over $130 million of borrowing capacity available under our revolving credit facility, which matures in December of 2023, and have access to an additional $150 million of uncommitted borrowing capacity under this agreement.
We also have access to $115 million of uncommitted borrowing capacity through the issuance of senior promissory notes under our note purchase agreement.
We anticipate the third quarter will likely be our weakest quarter of the year.
And as a result, sequential revenue could decrease approximately 5% to 9%.
Our revenue for the year could decrease roughly 11% to 14% compared to 2019.
During the second quarter, we recognized $0.5 million in restructuring costs related to reduction of employees across our businesses.
We expect these restructuring activities will reduce our cost structure by approximately $3.7 million annually.
On a positive note, we now expect net interest expense for 2020 to be under $8 million compared to our last earnings call estimate of $9 million to $9.5 million.

Summary:
After the initial surge in packaging and tissue demand early in the second quarter, these markets have returned to levels more indicative of the general economic environment.
Therefore, we will not be providing guidance at this time.
Consolidated gross margins were 43.5% in the second quarter of 2020, up 150 basis points compared to 42% in the second quarter of 2019.
In the second quarter of 2020, GAAP diluted earnings per share was $1 and our adjusted diluted earnings per share was $1.06.
We anticipate the third quarter will likely be our weakest quarter of the year.