Good day, welcome to the Miller Industries third quarter 2017 results conference call. As a reminder, all participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. At this time, I would like to turn the conference over to Daniel Johnston at FTI Consulting. Please go ahead, sir.
Thank you, good morning, everyone. I would like to welcome you to the Miller Industries conference call. We are here to discuss the company's 2017 third quarter results, which were released after the close of market yesterday. With us from the management team today are Bill Miller, Chairman of the Board, Jeff Badgley, Co-CEO, Debbie Whitmire, Executive Vice President and CFO, and Frank Madonia, Executive Vice President, Secretary, and General Counsel. Today's call will begin with formal remarks from management, followed by a question-and-answer period. Please note, in this morning's conference call, management may make forward-looking statements in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. I'd like to call your attention to the risks related to these statements, which are more fully described in the company's annual report filed on Form 10-K and other filings with the Securities and Exchange Commission.
With these formalities out of the way, I'd like to turn the call over to Jeff. Please go ahead, Jeff.
Thank you, good morning. We're pleased to discuss our third quarter performance with you today. It was another strong quarter for Miller Industries. We continue to see strong demand remaining in place in both our domestic and international end markets. We reported 2017 third quarter sales of $153.4 million, an increase of 3.9% compared to $147.6 million in the prior year period. Net income was $4.5 million, or $0.39 per share, compared to net income of $5.5 million, or $0.49 per share in the 2016 third quarter. Gross profit as a percentage of total sales this quarter was 10.2%, down from 11.6% in the third quarter of 2016. Our cost of operations was up 5.5% year-over-year.
Margins were compressed this quarter due to a number of coinciding factors, including product mix, higher health insurance cost, additional depreciation on investment in our facilities, and increasing supplier lead times. While we do see rising insurance costs as being a longer-term industry-wide concern, the costs within our control remain in check. We are encouraged by our ability to control year-over-year selling, general, and administrative expenses, as well as material cost. Our capital projects continue to progress nicely. Construction phases in Hermitage, Pennsylvania, and Ooltewah, Tennessee, are nearly complete, and construction in Greeneville, Tennessee, remains on track for completion during the fourth quarter of 2017. We are pleased by our successes to date and by the dedication of our people to this undertaking as we balance implementing processes in the new facilities with meeting our customers' expectations for product deliveries.
Our team is focused on meeting that challenge. That focus has kept our top-line performance near our record high. Overall, we are encouraged by our performance in this quarter. We continue to deliver solid top-line results. We remain focused on maintaining a healthy balance sheet and implementing processes in our newly constructed facilities to enhance product quality, foster margin expansion, and allow for production capacity to meet growing demand for our products. I'll turn the call over to Debbie, who will review the third quarter and nine-month results. After that, I'll be back with comments on the market environment and some closing remarks. Debbie?
Thanks, Jeff. Good morning, everyone. Net sales for the 2017 third quarter were $153.4 million versus $147.6 million for the 2016 third quarter, a 3.9% year-over-year increase compared to last year's quarterly sales. Cost of operations was $137.7 million for the 2017 third quarter, compared to $130.5 million for the 2016 third quarter. Gross profit was $15.7 million, or 10.2% of net sales the 2017 third quarter, compared to $17.1 million, or 11.6% of net sales for the 2016 third quarter. SG&A expenses were $8.6 million for the 2017 third quarter, compared to $8.5 million for the 2016 third quarter. As a percentage of sales, SG&A decreased to 5.6% from 5.8% in the prior year period.
Other income expense for the 2017 third quarter was a net gain of $106,000 compared to a net gain of $238,000 for the 2016 third quarter. Interest expense for the 2017 third quarter was $469,000 compared to $359,000 for the 2016 third quarter. Net income for the 2017 third quarter was $4.5 million, or $0.39 per diluted share, compared to net income for the 2016 third quarter of $5.5 million, or $0.49 per diluted share. Let me briefly review our results for the nine months ended September 30, 2017. Net sales for the first nine months of 2017 were $455.4 million compared to $452.5 million in the prior year period, an increase of 0.6%. Gross profit for the nine months ended September 30, 2017 was $48.6 million, or 10.7% of sales, compared to $49.1 million, or 10.9% of sales for the first nine months of 2016.
Net income for the first nine months of 2017 was $13.7 million, or $1.21 per diluted share, a decrease of 11.3% compared to net income for the first nine months of 2016 of $15.5 million, or $1.36 per diluted share. Turning to our balance sheet. Cash and cash equivalents as of September 30, 2017 were $33.5 million compared to $33.0 million as of June 30, 2017, and $31.1 million at December 31, 2016. Accounts receivable at September 30, 2017 totaled $135.4 million compared to $134.2 million as of June 30, 2017, and $125.4 million at December 31, 2016. Inventories were $64.6 million as of September 30, 2017 compared to $68.2 million as of June 30, 2017, and $64.1 million at December 31, 2016. Accounts payable at September 30, 2017 were $79.3 million compared to $82.6 million as of June 30, 2017, and $85.1 million at December 31, 2016.
As of September 30, 2017, we have borrowed $20 million under our $50 million unsecured revolving credit facility to help fund our ongoing capital projects. The company also announced its board of directors approved our quarterly cash dividend of $0.18 per share payable December the 11th, 2017 to shareholders of record at the close of business on December 4th, 2017. I'll turn the call back over to Jeff for further comments.
Thank you, Debbie. Overall, we are encouraged by the trends we are seeing across our business, both internationally and domestically. Our impressive top-line performance is a testament to our product's reputation in the market and our dedicated employees' ability to meet the needs of our customers while developing our business for future growth. As we look towards the final quarter of 2017, we remain committed to meeting strong demand, executing our strategic priorities, and maintaining a healthy balance sheet. To our employees, shareholders, suppliers, and customers, thank you for your ongoing support. With that, we're ready to take your questions.
Thank you. Ladies and gentlemen, if you would like to ask a question today, please press star and then one. If you are on a speakerphone, please pick up the handset or depress your mute function so the signal can reach our equipment. Again, that is star one if you'd like to ask a question today. We'll pause for just a moment to allow everyone a chance to signal. Once again, ladies and gentlemen, that is star one if you would like to ask a question today.
Ladies and gentlemen, it has been a pleasure reporting our Q3 earnings, we look forward to reporting our Q4 earnings in the future. Thank you very much for joining the call.
Once again, ladies and gentlemen, that concludes today's conference. We appreciate your participation today.