Our sales decreased 26% year-over-year from $553 million to $410 million and our adjusted diluted earnings per share from continuing operations decreased 45% from $0.57 per share to $0.37 per share.
Our sales to commercial customers decreased 42% and our sales to government and defense customers increased 4%.
For the quarter sales and government -- to government and defense customers were 49% of our total sales.
As we mentioned on the last earnings call, we expected relatively stable revenue which is what we saw in this quarter with sales up 2% sequentially.
Regarding profitability, our adjusted diluted earnings per share from continuing operations were up 19% sequentially reflecting our continued margin improvement progress.
On an adjusted basis, which excludes the benefit of the CARES Act, our gross margin improved sequentially from 13.9% to 16.1% and our operating margin improved from 4% to 5%.
We are also proud to have fully reinstated salaries and 401(k) benefits at the beginning of the third quarter which had been a priority for us as we look to attract and retain top talent.
We generated $18 million from operating activities from continuing operations and remain in a strong balance sheet position with 1.1 times net debt to adjusted EBITDA.
We expanded our distribution relationship with GE subsidiary Unison on a five-year program from the US Air Force to provide and repair and overhaul of F-16 accessories and extended our support of the Navy's H-60 Seahawk platform for an additional seven years.
We also began operations on our previously announced Honeywell 737 MAX EBAS contract.
Our sales in the quarter of $410.3 million were down 25.8% or $142.8 million year-over-year driven by the reduction in commercial passenger flying activity due to COVID-19.
Sequentially sales were up 1.7% with commercial sales up 7% driven by MRO volumes and government and defense sales down 3.3% driven by the scheduled reduction in activity and our program to deliver two C-40 aircraft to the US Marine Corps.
Gross profit margin in the quarter increased to 21% from 11.8% in the prior-year quarter driven primarily by the CARES Act payroll support.
On an adjusted basis, excluding the CARES Act support and other items, gross profit margin was 16.1% consistent with the 16% in the year-ago quarter despite the significant decline in sales.
Sequentially adjusted gross profit was up meaningfully from 13.9% to 16.1% reflecting the actions we have taken to reduce our indirect costs and drive efficiency.
Gross profit margin increased to 17% from 0.4% in the prior-year quarter, driven by the divestiture of the composites business and improved performance at the mobility operation.
SG&A expenses were $44.9 million for the quarter.
On an adjusted basis, SG&A was $42.8 million or 10.4% of sales down $9 million from the prior-year quarter, reflecting the reduction of our overhead cost structure.
We have an $8.8 million promissory note associated with the CARES Act, which we expect to repay during the fourth quarter.
Other adjustments during the quarter included $4 million of loss provision and exit costs for commercial programs contracts, $1.5 million of which reduced sales.
In addition, there was a gain of $4.3 million related to a legal settlement, which we have excluded from our adjusted results.
Also during the quarter, we reached a tentative agreement with the Department of Justice to settle the investigation of airlift under the False Claims Act for approximately $11.5 million.
As such, we recognized a charge in the quarter of $4.2 million in discontinued operations.
In the quarter, we generated $17.6 million of cash in our operating activities from continuing operations.
We reduced inventories by $21 million from our second quarter as we continued to focus on working capital management.
Our net debt at quarter-end was $108.4 million, down from $112.1 million at the end of Q2 and from $171.1 million at the end of Q3 of last year.
In addition, our accounts receivable financing program has decreased by $37.2 million over the last year from $85.6 million at the end of the year-ago quarter to $48.4 million.
Our overall leverage and liquidity remain strong with net debt of 1.1 times adjusted EBITDA, unrestricted cash of $99.2 million and unused capacity under our revolver of over $400 million.

Summary:
Our sales decreased 26% year-over-year from $553 million to $410 million and our adjusted diluted earnings per share from continuing operations decreased 45% from $0.57 per share to $0.37 per share.