“As we enter the fourth quarter, we will continue our focus on operational improvements and improved cash flow, which should significantly improve due to the reduction in our cash interest costs. Despite challenges in certain marketplaces, we believe our expectations for our direct mail envelope products and print related products continue to be a strong foundation for our organization, and our capital reinvestment plans this year will provide meaningful contributions to our future prospects."
Third Quarter Financial Results
Net sales in the third quarter of 2016 were $406.0 million compared to $419.8 million in the same period last year, a 3% decline. This was primarily driven by lower sales in the envelope segment, resulting from lower demand in the Company’s wholesale and office product envelopes, which accounts for approximately 2% of our consolidated net sales decline. In addition, Cenveo experienced lower sales in its label segment primarily due to the decision to exit its coating operation, which was completed in the second quarter of 2016 and accounts for approximately 1% of our consolidated net sales decline. These declines were offset in part by higher direct mail envelope volumes.
Operating income in the third quarter increased 7% to $20.9 million compared to $19.5 million in the same period last year. The increase was primarily due to a significant restructuring charge in the third quarter of 2015 related to the closure of a print facility, partially offset by lower gross profit in the label and envelope segments in the third quarter of 2016 due the aforementioned lower demand and decision to exit the coating operation. Non-GAAP operating income in the third quarter of 2016 was $25.5 million compared to non-GAAP operating income of $29.0 million for the same period last year. A reconciliation of all non-GAAP figures are reported in the tables below.
Income from continuing operations in the third quarter was $8.7 million, or $1.00 per diluted share, compared to a loss of $3.6 million, or $0.42 per diluted share, for the same period last year. The significant increase was primarily driven by gains on the early extinguishment of debt of $7.4 million. Non-GAAP income from continuing operations in the third quarter was $6.0 million, or $0.67 per diluted share, compared to income of $6.5 million, or $0.59 per diluted share, in the same period last year.