Our third quarter net sales of $396.7 million were once again very strong and increased 8.9% over the prior-year period.
This includes but is not limited to ensuring availability of our trusted product solutions typically within 48 hours or less.
Looking at our sales results in greater detail, although third quarter net sales benefited primarily from a full quarter of the first two price increases, our top line moderately declined by 3.3% compared to the second quarter of 2021, predominantly due to decreases in sales volumes from our home center channel, which I'll discuss in more detail shortly.
These price increases were primary contributors to another quarter of strong gross margins, which increased to 49.9% from 47.9% in the prior quarter and 47.6% in the year-ago period.
As a result, our income from operations improved to $100.6 million and led to strong earnings per diluted share of $1.70.
With that said, U.S. housing starts continue to show promise, improving by 19.5% during the first nine months of 2021 versus comparable period last year.
As Karen highlighted, our consolidated net sales increased 8.9% to $396.7 million.
Within the North America segment, net sales increased 6.8% to $338.6 million, primarily due to product price increases that took effect through the third quarter of 2021 in an effort to address rising material costs and were partially offset by a decline in sales volumes, primarily in our home center channel.
In Europe, net sales increased 22.5% to $54.8 million, primarily due to higher sales volumes compared to last year's COVID-19-related slowdown.
Europe sales also benefited by approximately $900,000 of positive foreign currency translations, resulting from some Europe currencies strengthening against the United States dollar.
Wood construction products remained consistent at 85% of total sales and concrete construction products also remained consistent at 15% of total sales.
Consolidated gross profit increased by 14.3% to $198 million, which resulted in another strong gross margin quarter at 49.9%.
Gross margin increased by 230 basis points, primarily due to the aforementioned price increases, which were partially offset by higher material costs.
On a segment basis, our gross margin in North America increased to 52.1% compared to 48.9%, while in Europe our gross margin declined slightly to 37.7% compared to 37.9%.
From a product perspective, our third quarter gross margin on wood products was 50.2% compared to 48% in the prior-year quarter, and was 44.6% for concrete products compared to 42.1% in the prior-year quarter.
As a result, total operating expenses were $97.4 million, an increase of $15.4 million or approximately 18.8%.
As a percentage of net sales, total operating expenses were 24.6% compared to 22.5.
Research and development and engineering expenses increased 18.5% to $14.6 million, primarily due to increased salaries and expenses on patents.
Selling expenses increased 19.3% to $35.1 million due to increased salaries, commissions and travel expenses.
On a segment basis, selling expenses in North America were up 18.9% and in Europe they were up 22.4%.
General and administrative expenses increased 18.6% to $47.8 million, primarily due to increased salaries, a variable compensation and travel expenses.
Our solid top-line performance, combined with our stronger Q3 gross margin, helped drive a 10.2% increase in consolidated income from operations to $100.6 million compared to $91.3 million.
In North America, income from operations increased 11% to $97 million, primarily due to the increase in gross profit, partly offset by higher operating expenses.
In Europe, income from operations increased 23.8% to $7.5 million, primarily due to the increase in sales volumes and gross profit.
On a consolidated basis, our operating income margin of 25.4% increased by approximately 30 basis points from 25.1%.
Our effective tax rate decreased slightly to 26.1% from 26.2%.
Accordingly, net income totaled $73.8 million or $1.70 per fully diluted share, compared to $67.1 million or $1.54 per fully diluted share.
At September 30th, cash and cash equivalents totaled $294.2 million, a decrease of $17.3 million compared to September 30, 2020.
And as of September 30, 2021, the full $300 million on our primary credit line was available for borrowing and we remained debt free.
Our inventory position of $385.5 million at September 30th increased by $75.3 million from our balance at June 30th, primarily due to the increases we saw in steel prices over the first nine months of the year.
As a result of our improved profitability and effective working capital management, we generated strong cash flow from operations of $40.5 million for the third quarter of 2021.
Our strong cash generation enabled us to invest $12 million for capital expenditures during the quarter as well as pay $10.9 million in dividends and repurchase 222,060 shares of our common stock at an average price of $108.64 per share for a total of $24.1 million.
On October 19, 2021, our Board of Directors declared a quarterly cash dividend of $0.25 per share.
And as of September 30, 2021, we had $75.9 million of our share repurchase authorization available, which remains in effect through the end of 2021.
We are updating our operating margin outlook to be in the range of 20% to 22% from our previous estimate of 19.5% to 21%.
We continue to expect our effective tax rate to be in the range of 25% to 26%, including both federal and state income tax rates.
And our capital expenditures outlook remains in the range of $55 million to $60 million, including approximately $15 million to $20 million that will be used for safety and maintenance capex.
As a result and based on our updated fiscal 2021 operating margin outlook, we currently expect our operating margin for the full year of 2022 will decline by approximately 400 basis points to 500 basis points year-over-year.

Summary:
Our third quarter net sales of $396.7 million were once again very strong and increased 8.9% over the prior-year period.
As a result, our income from operations improved to $100.6 million and led to strong earnings per diluted share of $1.70.
As Karen highlighted, our consolidated net sales increased 8.9% to $396.7 million.
Accordingly, net income totaled $73.8 million or $1.70 per fully diluted share, compared to $67.1 million or $1.54 per fully diluted share.
And our capital expenditures outlook remains in the range of $55 million to $60 million, including approximately $15 million to $20 million that will be used for safety and maintenance capex.