Thank you, Jim. I will cover our third quarter financial results first, noting where results differed from our expectations and highlighting year-over-year and sequential quarter comparisons. And then, I will talk about our balance sheet and cash flow, before getting into our order patterns and outlook for the fourth quarter. We were pleased to report third quarter earnings within the range of guidance we provided last quarter, despite revenue coming in lower than our estimates. The Americas drove the revenue shortfall as orders for day-to-day business from both large and smaller customers softened in September and October, after showing some improvement in the second quarter.
In addition, revenue associated with traditional furniture applications continued to decline.
Before I get into the details of our results, I want to first share a few highlights some of which Jim just referenced.
First, order patterns in the Americas improved in November, declining by 2% compared to the prior year versus a 7% decline, which we experienced earlier in the quarter.
In addition, the November comparison was negatively impacted by initial orders related to a very large project in the prior year and the divestiture of a dealer in the current year. Adjusted for these items, our orders in the Americas grew by approximately 4% in November, reflecting growth in project business and our marketing programs and relatively flat orders in continuing business compared to a double-digit percentage decline through the first two months of the quarter. I will give some additional color around our order patterns in a few minutes, but one of the highlight upfront that we saw some improvement in our November order patterns in the Americas.
Second, we are continuing to see growth in the pipeline of large project opportunities beyond the few notable increases I mentioned on the call in September. These opportunities will be highly competitive, but we expect to leverage our growing portfolio of new products and partnerships, as well as our smart and connected offering to compete aggressively for each of them.
Third, as it relates to our new product introductions, we have launched a significant number of new products and enhancements through the first three quarters of this year and we have plans to launch several additional new products over the next three months. And this latest wave includes some pretty significant introductions, many of which are receiving positive reviews and pre-sale activities with current customers and competitive accounts. Revenue in the third quarter from new products and enhancements launched in the last three years continued to grow at a double-digit percentage compared to the prior year. Fourth, we’re excited about the pending acquisition of AMQ, which we expect will help us grow our business with new customers, as well as protect our share of business with existing customers who are broadening their spend across lower price points. Fifth, as I said in the release, we are feeling positive momentum in EMEA. Even though, our results were below our breakeven expectations in the quarter. And lastly, the other category continues to perform largely consistent with our expectations. Operating income in the category was lower than the levels we have posted in recent quarters due to the very high level of revenue we posted in Asia Pacific in the first half of the year, as well as the seasonal strength at PolyVision in the second quarter.
As it relates to revenue compared to our expectations in the third quarter, the organic decline of approximately 3% was below the bottom of the estimated range we provided in September.
For the Americas, revenue declined 4% and was negatively impacted by reduced demand for day-to-day business in the first two months of the quarter. The divestiture late in the quarter also had an unfavorable impact of a few million dollars versus our expectations as did a few project installation delays compared to the level we typically experience at the end of the quarter. Revenue from continuing contracts in our marketing programs were also down in the third quarter, after growing in total in the second quarter.
For EMEA, revenue in the quarter was slightly lower than our expectations due to a few project installation delays. 1% organic revenue decline reflected strong growth in Iberia which was more than offset by lower revenue in the Middle East and the UK. The UK may be poised to improve in the fourth quarter, given recent improvements in order patterns and project win rates. Revenue in Germany and France was relatively flat compared to the prior year as continued strength in day-to-day business was offset declines in project business.
With the improvement of economic and political sentiment in France and Germany, we are continuing to see improvement in our pipeline of project activity compared to the prior year, and we believe our new learning and innovation center in Munich will contribute to an improvement in our win rate as we compete for projects across the region. In the other category, revenue was largely consistent with our expectations and reflected organic growth from each of the three businesses. From an earnings perspective, the $0.22 per share in the quarter was within our range of expectations we communicated in September, but included a few plusses and minuses across the segments and below the operating income line. In the Americas, most of the favorable impact of lower revenue was offset by a better than expected gross margins and lower operating expenses which also included a $1.5 million cost recovery from a supplier and a $1 million gain related to the divestiture in the quarter.
For EMEA, as I said in the release, our results were negatively impacted by customer postponements of installations and various operational issues, which our teams are working diligently to resolve.
We also recorded approximately $2.5 million of out of period accounting adjustments and unanticipated severance costs in the quarter. Below the operating income line, other income net was favorable to the typical 1 to $2 million estimate we have communicated in the past due to very strong income from our joint ventures, reduced in part by foreign exchange losses.
We continue to believe a range of 1 to $2 million per quarter for other income net is a reasonable estimate for your models.
Regarding our effective tax rate, excluding the favorable tax adjustments we recorded in connection with filing our tax returns in the quarter, the effective rate approximated to 36% estimate we communicated in recent quarters. Switching to year-over-year comparisons, operating income decreased by $16 million in the third quarter due to a $12 million reduction in the Americas and a $6 million in EMEA. The Americas reduction in operating income was driven by the 4% revenue decline and increased spending to support product development and other areas of growth. These impacts were reduced by approximately $10 million of lower variable compensation expense. In EMEA, the reduction was driven by approximately $1.5 million of unfavorable out of period accounting adjustments in the current quarter, compared to approximately $2 million of favorable items in the prior year.
In addition, operating expenses in the current quarter included approximately $2 million of costs related to our sales and dealer conference and some anticipated severance.
Beyond these items, favorable impacts from our gross margin improvement initiatives and lower variable compensation expense offset the unfavorable impacts of lower revenue, higher commodity costs and the operational and efficiencies we experienced in the quarter.
We are planning to implement a global price increase in February, which we expect will begin offsetting some of the commodity cost inflation we have been talking about over the past few quarters. Sequentially, third quarter operating income was $16 million lower compared to the second quarter, primarily due to seasonal and other unfavorable shifts in business mix and $9 million of higher operating expenses, which included the items impacting the third quarter that I mentioned previously, plus the impact of recording a $4 million property gain in the second quarter.
Moving to the balance sheet and cash flow. Cash generated from operating activities totaled $73 million in the third quarter, which was lower than the prior year, primarily due to lower levels of profitability. Capital expenditures totaled $22 million in the third quarter and $58 million year-to-date.
We continue to expect capital expenditures for fiscal 2018 to fall within a range of $80 million to $90 million. We returned approximately $15 million to shareholders in the third quarter through payment of the quarterly dividend of $0.1275 per share and yesterday, the Board of Directors approved the same level of dividends to be paid in January. We did not repurchase any shares during the quarter, except for those used to settle income tax obligations related to the vesting of equity awards. Other noteworthy items include the sale of an own dealer in the U.S., which resulted in $4 million of proceeds in the recording of a note receivable of approximately $4 million. And in early December, we received an $18 million refund of U.S. taxes in connection with the tax planning strategy to accelerate the monetization of foreign tax credit carry-forwards.
Turning to order patterns, I will start with the Americas segment where our orders in the third quarter declined 6% compared to the prior year. The prior year included initial orders from a very large project and we had an owned dealer divestiture during the current quarter. Adjusted for these impacts, third quarter orders in the Americas declined by approximately 3%. Across the months, year-over-year order comparisons in September and October were impacted by the pull forward effect of an October price increase in the prior year. Combining the months, orders decline by 7% in the first two months of the quarter and in November, orders declined by 2%. Early in the quarter, the decline was driven by reduced demand for continuing business from our largest customers and in November, the decline was driven by the very large project in the prior year that I just mentioned.
In addition, the rate of decline for continuing business moderated to nearly flat in November compared to the prior year versus the significant declines earlier in the quarter.
And so far in December, we’re seeing a modest growth rate. Orders from our marketing programs also improved in November and early December growth at a high single-digit rate compared to a decline earlier in the quarter. Project order comparisons have continued to reflect year-over-year declines, in large part due to the very large project in the prior year. Customer order backlog at the end of the quarter was 7% lower compared to the prior year with approximately half of the decline attributable to the very large project in the prior year.
Turning to vertical markets in the Americas, order patterns have remained mixed and somewhat volatile quarter-to-quarter, reflecting year-over-year growth this quarter from the energy, government and education sectors while the most notable declines came from the healthcare, manufacturing and technical professional sectors.
For EMEA, we experienced broad-based order growth in the third quarter with the only notable decline coming from one market which faced a strong prior year comparison linked to a large project win. Order growth rates were strongest in some of our owned dealers but we also posted solid growth rates in Iberia, the UK and Germany. Across the months, orders in Western Europe have now grown for five consecutive months; and so far in December, the growth trend is continuing. In other EMEA markets, monthly ups and downs in order rates are usually linked to the quantity, size and timing of larger projects. Customer order backlog in EMEA ended the quarter down 4% compared to the prior year due to the large project in the prior year I just mentioned.
Within the other category, orders in total will modestly compared to the prior year and included growth from PolyVision, partially offset by small declines in Asia Pacific and Designtex compared to strong prior years.
Turning to the fourth quarter of fiscal 2018, we expect to report revenue in the range of 740 to $765 million which includes approximately $17 million of estimated favorable currency translation effects, expected revenue from the pending acquisition of AMQ, and the impact of divestitures. The projected revenue range translates to an expected organic decline of 3 to 6% compared to the prior year, which included initial revenue from the very large project in the Americas, as mentioned previously.
For AMQ, we expect to close the acquisition before the end of the calendar year and include the results of their operations with ours beginning in January.
As we said in the announcement earlier this month, their revenue over the past 12 months approximated $37 million, and we expect to drive growth by leveraging the strength of their offering and our dealer network and global customer base.
Our growth objectives will require some investment, and we also expect some amortization of intangible assets.
So, we are expecting a relatively small contribution from the AMQ acquisition to our operating income for the next couple of quarters.
As we said in the release, we expect to report diluted earnings per share between $0.14 to $0.16 for the fourth quarter of fiscal 2018. This estimate includes an expectation that our consolidated gross margins will be slightly lower in the fourth quarter compared to the third quarter driven by lower volume, unfavorable shifts in business mix, and higher commodity costs. Operating expenses in the fourth quarter are expected to be similar to the level we reported in the third quarter.
For the segments, we expect to report sequential and year-over-year decreases in Americas operating income offset in part by expected sequential and year-over-year improvements in EMEA.
In addition, the effective tax rate assumption embedded in this estimate includes an unfavorable adjustment, approximating $1 million related to the upcoming vesting of equity awards.
Beyond the fourth quarter, we are optimistic about the potential for growth across our segments. We estimate that growth in revenue from new products and partnerships could begin to exceed the declines in legacy applications within the next few quarters. And we are pleased to see an improvement in large project opportunities. At the same time, we are beginning to moderate the level of incremental investments in operating expenses and across our industrial model, which should have a positive impact on our operating leverage related to the projected growth. From there, we will turn it over for questions.