Earnings from continuing operations were $130.4 million or $1.07 per diluted share on net sales of $1.8 billion.
Excluding the impact of a gain on the sale of a small rail reclamation business, adjusted earnings from continuing operations were $127.1 million or $1.04 per diluted share.
CMC reported a core EBITDA of $230.5 million, generating an annualized return on invested capital of 18%.
We expect more growth in the future, especially once our state-of-the-art Arizona 2 micro mill starts up in early 2023.
And with recent actions firmly entrenched in our financial performance, CMC is roughly halfway to our longer-term goal of $50 million in annual cost efficiencies.
In April, we received the required air permit for Arizona 2, CMC's planned state-of-the-art micro mill at our Mesa, Arizona site.
We will be ramping operations within a very strong market environment, which will help shorten the time to achieve our targeted annual run rate incremental EBITDA of $20 million.
Historically, the lag between new residential activity and the inflow of supporting non-residential investment has been 9 to 24 months.
Based on our analysis, we believe the annual percentage increase to funding ranges from 30% to 60% across the various proposals.
As Barbara noted, we reported record earnings from continuing operations of $130.4 million, or $1.07 per diluted share, roughly double the prior-year levels of $64.2 million and $0.53 per diluted share.
Results this quarter include a net after-tax benefit of $3.3 million related to the sale of a small rail reclamation business.
Excluding the impact of this, adjusted earnings from continuing operations were $127.1 million or $1.04 per diluted share.
Core EBITDA from continuing operations was $230.5 million for the third quarter of 2021, up 49% from the year-ago period and 35% on a sequential basis.
Both our North America and Europe segments contributed significantly to year-over-year earnings growth, while core EBITDA per ton of finished steel reached a record level of $144 per ton.
The third quarter marked the ninth consecutive quarter in which CMC generated an annualized return on invested capital at or above 10%, which is well above our cost of capital.
The North America segment recorded adjusted EBITDA of $207.3 million for the quarter, an all-time high, compared to adjusted EBITDA of $159.4 million in the same period last year.
The largest drivers of this 30% improvement were a significant increase in margins on steel products, strong volume growth, and expanded margins on sales of raw materials.
Selling prices for steel products from our mills increased by $170 per ton on a year-over-year basis and $99 per ton sequentially.
Since bottoming in August 2020, our average monthly selling price has rebounded roughly $220 per ton.
Margin over scrap on steel products increased $40 per ton from a year ago and $74 per ton sequentially.
The average selling price of downstream products of $963 per ton shipped was essentially flat compared to the prior-year third quarter.
Shipments of finished product in the third quarter increased 9% from a year ago.
Both rebar and merchant bar volumes out of our mills reached record levels, increasing 8% and 28% respectively compared to the third quarter of fiscal 2020.
Downstream product shipments were impacted by a reduced backlog and weather challenges in certain geographies, resulting in a 4% reduction in year-over-year volume decline.
Our Europe segment generated adjusted EBITDA of $50 million in -- for the third quarter of 2021, compared to adjusted EBITDA of $14.3 million in the same period of the prior year.
Margins over scrap increased $90 per ton on a year-over-year basis and were up $84 per ton from the prior quarter.
Tight market conditions provided the backdrop to achieve the segment's higher -- highest average selling price in nine years, reaching $664 per ton during the third quarter.
This level represented an increase of $227 per ton compared to a year ago and $132 per ton sequentially.
Europe volumes increased 8% compared to the prior year and reached their highest third-quarter total in a decade.
As of May 31, 2021, cash and cash equivalents totaled $443 million.
In addition, we had approximately $639 million of availability under our credit and accounts receivable programs.
In March, we upsized our revolving credit facility to $400 million from $350 million and extended the maturity till 2026.
During the quarter, we generated $94 million of cash from operating activities despite a $79 million increase in working capital.
As can be seen on Slide 12, our net debt-to-EBITDA ratio now sits at 1.0 times, while our net debt to capitalization is just 20%.
CMC's effective tax rate for the quarter was 22.6%, which was both below our full-year effective rate forecast to be around 25%.
Lastly, I would like to provide that our current outlook for capital expenditures in fiscal 2021 remains between 200 million and 225 million of which roughly 100 million will be used for the new micro mill.
For comparison purposes, we have previously stated that our typical capital spend averages around 150 million annually.

Summary:
Earnings from continuing operations were $130.4 million or $1.07 per diluted share on net sales of $1.8 billion.
Excluding the impact of a gain on the sale of a small rail reclamation business, adjusted earnings from continuing operations were $127.1 million or $1.04 per diluted share.
As Barbara noted, we reported record earnings from continuing operations of $130.4 million, or $1.07 per diluted share, roughly double the prior-year levels of $64.2 million and $0.53 per diluted share.
Excluding the impact of this, adjusted earnings from continuing operations were $127.1 million or $1.04 per diluted share.