Q2 ‘19 Q2 ‘18 Change
Revenue $105,100 $105,533 –
Gross profit 21,030 27,538 (24%)
Gross profit excluding
exceptional items 23,441 27,610 (15%)
Operating profit 5,144 11,239 (54%)
EBITDA 11,406 14,170 (20%)
Despite an 11% decrease versus March 31, 2019, order backlog maintained a high level of $198.5 million as of June 30, 2019 and the Company signed $33.2 million in new orders during the second quarter of 2019. This represents a 0.54x book to bill ratio. This lower book to bill ratio was negatively impacted by timing, as several large orders were delayed into the third quarter. Order intake of over $40 million was achieved in July, driven by strong orders of turbine blade coating and induction furnaces for the aerospace market.
AMG Technologies' second quarter 2019 revenue was relatively unchanged versus the prior year as revenue generated from the delivery of turbine blade coating furnaces and nuclear waste recycling furnaces remained strong.
Second quarter 2019 gross profit decreased by $6.5 million, or 24%, to $21.0 million and gross margin was 20% compared to 26% in the second quarter 2018, due to lower prices in the Titanium Alloys and Coatings business during the quarter.
SG&A expenses decreased slightly to $15.9 million in the second quarter, compared to $16.3 in the same period in 2018, primarily due to lower variable compensation expense.
AMG Technologies’ second quarter EBITDA decreased by 20%, or $2.8 million, to $11.4 million from $14.2 million in the second quarter of 2018 due to lower prices in the Titanium Alloys and Coatings business and timing effects in the Engineering business.
AMG recorded an income tax benefit of $13.5 million in the second quarter 2019 as compared to a tax expense of $19.5 million in the same period in 2018. The tax benefit is due primarily to losses in the United States related to the decline in vanadium profitability and vanadium inventory cost adjustments in the current year.
AMG paid taxes of $6.3 million in the second quarter 2019 as compared to tax payments of $7.0 million in the same period in 2018. As a result of the year-over-year volatility in income and the timing of cash tax payments, the present cash tax rate is not indicative of the current year performance as payments in the current year are reflective of the income in 2018 and not 2019 which is significantly impacted by the decline in vanadium prices. We do believe that once earnings have stabilized, the cash tax rate is the more meaningful metric with regards to AMG’s taxes due to the volatile nature of the company’s deferred tax balances.
AMG’s second quarter 2019 gross loss of ($4.2) million includes exceptional items, which are not included in the calculation of EBITDA.