Please review slides 2 and 3 in their entirety.
Our consolidated net sales increased 11.4% for the fourth quarter and 15.2% for the full year.
While our fourth quarter adjusted EBITDA decreased primarily due to the challenging operating environment, we still achieved 6.8% growth for the year.
I am especially pleased with our cash flow for the year, where we generated $94 million of free cash flow.
We ended the year with a stronger cash position compared with the prior year after acquiring i2O Water for $19.7 million and allocating $44.8 million to shareholders.
We repurchased $10 million of common stock during the fourth quarter and recently announced a dividend increase of approximately 5.5%.
During the fourth quarter, we generated consolidated net sales of $295.6 million, which increased $30.3 million or 11.4% as compared with fourth quarter last year.
We generated a 10.8% increase in consolidated net sales when compared with the fourth quarter of 2019, which preceded the pandemic, reflecting improved end market demand.
Our gross profit this quarter decreased $7.6 million or 8.1% to $86.3 million compared with the fourth quarter of the prior year, yielding a gross margin of 29.2%.
Gross margin decreased 620 basis points compared with the prior year.
Our total material costs increased 18% year-over-year in the quarter, primarily driven by higher raw materials, which increased sequentially and year-over-year.
Our primary raw materials are scrap steel and brass ingot and prices of both were up over 50% year-over-year.
Selling, general and administrative expenses of $56.6 million in the quarter, increased $4.5 million compared with the prior year.
SG&A as a percent of net sales was 19.1% in the fourth quarter compared with 19.6% in the prior year.
Operating income of $27.8 million, decreased $12.9 million or 31.7% in the fourth quarter compared with $40.7 million in the prior year.
Operating income includes strategic reorganization and other charges of $1.9 million in the quarter, which primarily relate to our previously announced plant restructurings.
Adjusted operating income of $29.7 million decreased $12.1 million or 28.9% as compared with $41.8 million in the prior-year quarter.
Adjusted EBITDA of $45.6 million decreased $12 million or 20.8%, leading to an adjusted EBITDA margin of 15.4%, which is 630 basis points lower than the prior year.
For the full year 2021, we generated adjusted EBITDA of $203.6 million, which grew 6.8%, yielding an adjusted EBITDA margin of 18.4%.
Interest expense net for the 2021 fourth quarter declined to $4.4 million as compared with $6 million in the prior-year quarter.
The decrease in net interest expense in the quarter primarily resulted from lower interest expense as a result of the refinancing of our senior 5.5% notes with senior 4% notes.
The effective tax rate this quarter was 24.3% as compared with 24.8% last year.
For the full year, our effective tax rate was 25.8% as compared with 23.5% for the prior year.
For the quarter, we generated adjusted net income per share of $0.12 compared with $0.17 in the prior year.
Infrastructure net sales of $271.9 million, increased $29.9 million or 12.4% as compared with the prior year primarily as a result of increased shipment volumes, particularly of our hydrant, iron gate valve, service brass and repair products and higher pricing.
Adjusted operating income of $46.2 million, decreased $10.6 million or 18.7% in the quarter as higher inflation, unfavorable manufacturing performance and higher SG&A expenses were only partially offset by higher pricing and increased volumes.
Adjusted EBITDA of $59.3 million, decreased $10.3 million or 14.8%, leading to an adjusted EBITDA margin of 21.8%.
For the full year, adjusted EBITDA margin was 25.2%.
Technologies net sales of $23.7 million, increased 1.7% as compared with the prior year primarily as a result of our acquisition of i2O Water.
Adjusted operating loss was $4.3 million as compared with adjusted operating loss of $2.3 million in the prior year.
Technologies adjusted EBITDA was a loss of $2.4 million as compared with adjusted EBITDA loss of $200,000 in the prior year.
Net cash provided by operating activities for the year ended September 30, 2021, improved $16.4 million to $156.7 million, primarily as a result of the $22 million Walter Energy tax payment in the prior year.
Our net working capital as of September 30, 2021, decreased $11.3 million to $207.1 million.
Net working capital as a percent of net sales improved to 18.6% compared with 22.7%, primarily as a result of better inventory turns.
We invested $16.6 million in capital expenditures during the fourth quarter, bringing the year-to-date total to $62.7 million as compared with $67.7 million in the prior year.
Free cash flow for the year improved $21.4 million to $94 million and exceeded adjusted net income.
At September 30, 2021, we had total debt of $446.9 million and cash and cash equivalents of $227.5 million.
At the end of the fourth quarter, our net debt leverage ratio improved to 1.1 times from 1.3 times at the end of the prior year.
Our senior 4% notes have no financial maintenance covenants, and our ABL agreement is not subject to any financial maintenance covenant unless we exceed the minimum availability thresholds.
Based on September 30, 2021 data, we had approximately $158.7 million of excess availability under the ABL agreement, which brings our total liquidity to $386.2 million.
The gross margin gap was approximately $15 million with the labor challenges making up more than one-third of the gap.
We experienced another sequential increase in raw material inflation, resulting in scrap steel and brass ingot prices up over 50% versus the prior year.
In the fourth quarter, the operational challenges were even greater for our specialty valve product portfolio, which accounts for approximately 15% of annual sales.
Net sales of products in the Water Flow Solutions business were approximately 60% of 2021 consolidated net sales.
Net sales of products in the Water Management Solutions business unit were approximately 40% of 2021 consolidated net sales.
Residential construction activity was incredibly strong during 2021, highlighted by total housing starts increasing approximately 18% and single-family starts increasing around 23%.
We currently anticipate that our full year 2022 consolidated net sales will increase between 4% and 8%, with our adjusted EBITDA also increasing between 4% and 8% as compared with the prior year.
Additionally, we repurchased $10 million of common stock during the fourth quarter after resuming our share repurchases earlier this year.
We currently have $135 million remaining authorization on our share repurchase program.

Summary:
During the fourth quarter, we generated consolidated net sales of $295.6 million, which increased $30.3 million or 11.4% as compared with fourth quarter last year.
For the quarter, we generated adjusted net income per share of $0.12 compared with $0.17 in the prior year.
We currently anticipate that our full year 2022 consolidated net sales will increase between 4% and 8%, with our adjusted EBITDA also increasing between 4% and 8% as compared with the prior year.