Our acquisition of this business will create a new manufacturing base for us in India, where we have leading market position and have been active for more than 20 years.
Q3 revenue was up 29% compared to the third quarter of 2020 to a record $200 million.
Excluding acquisitions and the favorable impact of FX, revenue was up 18% compared to the same period last year.
Our aftermarket parts consumables revenue was up 28% to a record $131 million in Q3.
Solid execution contributed to boosting our adjusted EBITDA margin to 20.5%, which led to our excellent operating cash flow of $38 million in Q3.
Bookings were exceptional in the quarter, up 71% to a record $245 million.
Excluding acquisitions and FX, bookings were up 57%, with contributions from all three of our operating segments.
Flow Control segment achieved its fifth consecutive increase in quarterly revenue, reaching a record $76 million in the third quarter, up 34% compared to Q3 of last year.
Aftermarket parts revenue was exceptionally strong and made up 72% of total Q3 revenue.
Bookings were also a record at $77 million, up 55% compared to last year.
Organic bookings, which excludes acquisitions and FX, were up 32% compared to the same period.
Improved operating leverage led to record adjusted our adjusted EBITDA margin of 29.1%.
Our Industrial Processing segment continued to experience strong demand with bookings nearly doubling from the same period last year to a record $119 million.
Revenue in this segment increased 31% to $82 million with strong performance in aftermarket parts and capital business.
Adjusted EBITDA was up 24%, while adjusted EBITDA margin declined compared to Q3 of last year when we received employee retention benefits related to the pandemic.
Revenue was up 17% to $42 million with parts revenue, making up 59% of total revenue in the quarter.
Bookings in this segment were up compared to same period last year to a record $49 million in Q3.
Solid execution of our buying businesses, including our recent acquisition, helped boost adjusted EBITDA by 26% and adjusted EBITDA margin by 120 basis points compared to the same period last year.
Consolidated gross margins were 44.9% in the third quarter of 2021 compared to 44.2% in the third quarter 2020.
Our consolidated gross margins in the third quarter of 2021 were negatively affected by the amortization of acquired profit and inventory related to the Clouth and Balemaster acquisitions, which lowered consolidated gross margins by 110 basis points.
In the third quarter of 2020, government assistance benefits increased consolidated gross margins by 110 basis points.
Excluding the impact from both of these consolidated gross margins were approximately 43% in both periods.
Our parts and consumables revenue represented 66% of revenue in both periods.
SG&A expenses were $52.3 million in the third quarter of 2021, an increase of $8.5 million compared to $43.9 million in the third quarter 2020.
Third quarter of 2021 SG&A includes $3.4 million in SG&A from our acquisitions.
There was an unfavorable foreign currency translation effect of $0.9 million in the quarter and a reduction in government assistance benefits of $0.7 million.
We also incurred acquisition-related costs of $1.3 million in the third quarter of 2021 compared to $0.4 million in the third quarter 2020.
As a percentage of revenue, SG&A expenses decreased to 26.2% in the third quarter of 2021 compared to 28.4% in the prior year period.
Our effective tax rate was 24.6% in the third quarter of 2021, lower than we anticipated, primarily due to tax benefits from acquisition-related expenses, employee equity awards and the reversal of tax reserves associated with uncertain tax positions.
Our GAAP diluted earnings per share was $1.75 in the third quarter, up 37% compared to $1.28 in the third quarter 2020, and our adjusted diluted earnings per share increased 50% to $1.97.
Adjusted EBITDA increased 36% to $40.9 million or 20.5% of revenue compared to $30 million or 19.4% of revenue in the third quarter of 2020 due to strong performance in our Flow Control segment, which was up 42% with a large portion attributable to organic growth.
This is the second quarter in a row that our consolidated adjusted EBITDA, as a percentage of revenue, has exceeded 20% and we expect to also achieve this for full year 2021.
Operating cash flow increased 56% to $37.9 million in the third quarter of 2021 compared to $24.4 million in the third quarter 2020.
Free cash flow increased 53% to $34.6 million in the third quarter of 2021 compared to $22.6 million in the third quarter of 2020.
We paid $141.4 million for the acquisitions of Clouth and Balemaster and we borrowed $63.1 million related to these acquisitions.
Despite the significant acquisition activity in the quarter, we were able to utilize our strong cash flows to pay down our debt by $26 million.
We also paid $3.4 million for capital expenditures and paid a $2.9 million dividend on our common stock.
In the third quarter of 2021, our GAAP diluted earnings per share was $1.75.
And after adding back acquisition-related costs of $0.22, our adjusted diluted earnings per share was $1.97.
In the third quarter of 2020, our GAAP diluted earnings per share was $1.28, and our adjusted diluted earnings per share was $1.31.
As shown in the chart, the increase of $0.66 in adjusted diluted earnings per share in the third quarter of 2021 compared to the third quarter 2020 consists of the following: $0.90 due to higher revenue; $0.09 from acquisitions, net of interest expense and acquisition borrowings; and $0.05 due to lower interest expense.
These increases were partially offset by $0.21 due to higher operating expenses, $0.15 due to a decrease in the amounts received from government assistance programs.
$0.01 from higher noncontrolling interest expense and $0.01 due to higher weighted average shares outstanding.
Collectively, included in all the categories I just mentioned, was a favorable foreign currency translation effect of $0.07 in the third quarter of 2021 compared to the third quarter of last year due to the weakening 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, decreased to 113 at the end of the third quarter of 2021 compared to 140 at the end of the third quarter of 2020.
Working capital, as a percentage of revenue, was 13.5% in the third quarter of 2021 compared to 15.6% in the third quarter 2020.
Our net debt, that is debt less cash, increased $115 million sequentially to $231 million at the end of the third quarter of 2021.
We borrowed $63 million in the quarter to fund our acquisitions, and we were able to pay down $26 million of debt in the quarter.
Our leverage ratio, calculated in accordance with our credit agreement, was 1.69 at the end of the third quarter 2021 compared to 1.71 at the end of the second quarter of 2021.
Our net interest expense decreased $0.3 million to $1.3 million in the third quarter of 2021 compared to $1.6 million in the third quarter of 2020.
At the end of the third quarter of 2021, we had $105 million of borrowing capacity available under our revolving credit facility, which matures in December of 2023.
Although we had record bookings of $245 million in the third quarter, which is the fourth record quarter in a row.
We ended the third quarter with a record backlog of $299 million, the current headwinds from supply chain and logistical constraints have caused us to reduce our revenue expectations for the fourth quarter.
We now anticipate revenue of $210 million to $215 million, down from $220 million to $225 million that we noted in the July call.
For the full year 2021, we now anticipate revenue of $778 million to $783 million revised from $783 million to $793 million.
This change in the revenue range includes $13 million of revenue that has been moved into 2022 and as a result of supply chain issues or customer requested changes to the shipping dates.
We anticipate fourth quarter gross margins will be 42%, which includes the impact of amortizing the acquired profit and inventory.
Our current estimate for the amortization of acquired profit and inventory in the fourth quarter is $2.1 million or $0.13.
We anticipate SG&A expenses will be approximately $55 million to $56 million, and R&D will be a little over $3 million in the fourth quarter.
The SG&A expense includes backlog amortization of approximately $600,000 or $0.04.
We anticipate our net interest expense will be approximately $1.4 million in the fourth quarter of 2021, and we anticipate the tax rate for the quarter will be 27% to 28%.

Summary:
Q3 revenue was up 29% compared to the third quarter of 2020 to a record $200 million.
Bookings were exceptional in the quarter, up 71% to a record $245 million.
Our GAAP diluted earnings per share was $1.75 in the third quarter, up 37% compared to $1.28 in the third quarter 2020, and our adjusted diluted earnings per share increased 50% to $1.97.
In the third quarter of 2021, our GAAP diluted earnings per share was $1.75.
And after adding back acquisition-related costs of $0.22, our adjusted diluted earnings per share was $1.97.
We ended the third quarter with a record backlog of $299 million, the current headwinds from supply chain and logistical constraints have caused us to reduce our revenue expectations for the fourth quarter.
For the full year 2021, we now anticipate revenue of $778 million to $783 million revised from $783 million to $793 million.