We delivered strong third quarter results with our sales increasing 17.5% year-over-year to $364.3 million on significantly higher volume.
Compared to the second quarter of 2020, our sales increased 11.7%.
Further, we achieved a considerable improvement in our gross profit margin to 47.6% from 44.4% in the prior year quarter, primarily related to lower material and labor costs.
The strength in our gross profit margin combined with our efforts in expense management and reduced cost from travel and other restrictions, as a result of the COVID-19 helped drive a 49.8% year-over-year increase in our income from operations to $91.3 million and strong earnings of $1.54 per diluted share.
We estimate sales from the home center channel, where we see much of our repair and remodel business, improved 125% over the prior year period.
In addition, both our mechanical anchor and fastener product solutions were set in 987 stores among other competing manufacturers.
By the end of October, we expect our product set to be nearly completed in all 1,737 Lowe's stores.
Our sales were further supported by strong US housing starts in 2020.
In the third quarter of 2020, housing starts grew 11.4% versus the comparable period last year and grew 29.9% versus the second quarter of 2020.
Notably, in the West and South, where we provide a meaningful amount of content into homes, third quarter starts grew 7.6% and 14.1% respectively year-over-year.
We estimate over 40% of our core wood connector sales are to customers with software needs and believe this figure will increase over time.
We were also very pleased to declare our quarterly dividend as we have done consistently since 2004.
As previously announced, Mike will be joining Simpson at the end of November after spending over 22 years in numerous leadership positions at Henkel, a global chemical and consumer goods company.
Mike replaces our former COO, Ricardo Arevalo, who retired in February of 2020 after 20 years of service to Simpson Strong-Tie.
As Karen highlighted, our consolidated sales were strong, increasing 17.5% to $364.3 million.
Within the North America segment, sales increased 19% to $316.9 million, primarily due to the return of a home center customer and increased repair and remodel activity, as well as from other sales distributor channels, which experienced increased new housing starts and repair and remodel activity.
In Europe, sales increased 6% to $44.8 million, primarily due to higher sales volumes.
Europe sales benefited by approximately $2.1 million of positive foreign currency translations resulting from some Europe currencies strengthening against the United States dollar.
Wood Construction products represented 85% of total sales compared to 84% and concrete construction products represented 15% of total sales compared to 16%.
Gross profit increased by 25.9% to $173.2 million, which resulted in a strong gross margin of 47.6%.
Gross margin increased by 320 basis points, primarily due to lower material and to a lesser extent reduced labor costs, which were partially offset by higher warehouse and shipping costs.
On a segment basis, our gross margin in North America improved to 48.9% compared to 45.6%, while in Europe our gross margin decreased to 37.9% compared to 38.4%.
From a product perspective, our third quarter gross margin on wood products was 48% compared to 44.4% in the prior year quarter and was 42.1% for concrete products compared to 41.6% in the prior year quarter.
Research and development and engineering expenses increased 2.6% to $12.3 million, primarily due to cash profit sharing and personnel costs, partly offset by lower capitalized software development costs.
Selling expenses increased 6.2% to $29.4 million, due to increases in cash profit sharing, sales commissions, personnel costs, and stock-based compensation, which were partially offset by lower travel, fuel and entertainment expenses and advertising expense.
On a segment basis, selling expenses in North America were up 7.3% and in Europe they increased 1%.
General and administrative expenses increased 8.7% to $40.3 million primarily due to increases in cash profit sharing, stock-based compensation, depreciation and amortization and insurance, partly offset by lower travel associated expenses.
On a segment level, general and administrative expenses in North America increased 5.6%, in Europe G&A, slightly decreased.
Total operating expenses were $82 million, an increase of $5.3 million or approximately 6.9%.
As a percentage of sales, total operating expenses were 22.5%, an improvement of 220 basis points compared to 24.7%.
Our solid topline performance combined with our strong gross margin and diligent management of costs and operating expenses, helped drive a 49.8% increase in consolidated income from operations to $91.3 million compared to $61 million.
In North America, income from operations increased 53.7% to $87.4 million, due to our strong sales and the strength of our gross profit margin.
In Europe, income from operations increased 12.8% to $6.1 million primarily due to increased gross profit.
On a consolidated basis, our operating income margin of 25.1% increased by approximately 540 basis points.
Our effective tax rate remained flat at 26.2%.
Accordingly, net income totaled $67.1 million or $1.54 per fully diluted share compared to $43.7 million or $0.97 per fully diluted share.
At September 30, cash and cash equivalents totaled $311.5 million, a slight decrease of $4 million compared to the balance at June 30, after paying down $75 million on our revolving credit facility during the quarter.
As a reminder, we drew down $150 million on a revolving line of credit during the first quarter of 2020 as a precautionary measure in order to preserve financial flexibility given the uncertainty of the length and impact of the COVID-19 pandemic.
As of September 30, approximately $225 million remained available for borrowing.
Our inventory position of $260.1 million at September 30, slightly decreased by $5.3 million from our balance at June 30, as we strived to maintain inventory levels to service the increased construction activity we typically see in the summer and fall months, along with the unprecedented demand we've experienced through the pandemic.
We generated strong cash flow from operations of $86.8 million for the third quarter of 2020, a decrease of $8.9 million or 9.3%.
During the third quarter, we used approximately $6.8 million for capital expenditures, which included a minimal amount for our ongoing SAP implementation project.
In regards to stockholder returns, we paid $10 million in dividends during the third quarter.
And on October 23, our Board of Directors declared a quarterly cash dividend of $0.23 per share, which will be payable on January 28, 2021 to stockholders of record as of January 7, 2021.
Net sales are estimated to increase in the range of 9% to 10% compared to the full-year ended December 31, 2019.
Gross margin is estimated to be in the range of approximately 45% to 46%.
Operating expenses as a percentage of net sales are estimated to be in the range of 25% to 26.5% and the effective tax rate is estimated to be in the range of 24.5% to 26%, including both federal and state income taxes.

Summary:
We delivered strong third quarter results with our sales increasing 17.5% year-over-year to $364.3 million on significantly higher volume.
The strength in our gross profit margin combined with our efforts in expense management and reduced cost from travel and other restrictions, as a result of the COVID-19 helped drive a 49.8% year-over-year increase in our income from operations to $91.3 million and strong earnings of $1.54 per diluted share.
Our sales were further supported by strong US housing starts in 2020.
As Karen highlighted, our consolidated sales were strong, increasing 17.5% to $364.3 million.
Accordingly, net income totaled $67.1 million or $1.54 per fully diluted share compared to $43.7 million or $0.97 per fully diluted share.