Karen Colonias -- President & Chief Executive Officer
Thanks Madeleine, and good afternoon, everyone. 2018 was a year of solid operational execution at Simpson. We achieved consolidated full-year net sales of approximately $1.1 billion, an increase of 10% from $997 million in 2017, due to increases in both sales volumes and average unit prices. This combined with our focus on cost cutting [REMOVIDO]s, resulted in our full-year of 2018 operating income of $176.2 million, increased 28% compared to the prior year period.
Net income increased by 40% to $129.5 million, and reproduced strong earnings of $2.78 per diluted share, an increase of 43% year-over-year. Throughout 2018, we repurchased $111.1 million of our common stock, a record for Simpson, reflecting our continued confidence in the strength and outlook for our business. These results represent solid progress toward our key financial targets under the 2020 plan, which we announced in the third quarter of 2017, with the goal of maximizing operating efficiencies and driving long-term shareholder value.
Today, I'm pleased to confirm, we remain focused on achieving these aggressive targets. These include, achieving an organic net sales compounded annual growth rate of 8%, reducing our total operating expenses, as a percentage of net sales to the 26% to 27% range to result in an operating income margin of approximately 21% to 22%.
Doubling our inventory turn rates and improving our return on invested capital for a range of 17% to 18%. As part of our 2020 Plan announcement, we also provided specific benchmark to achieve in fiscal 2018. These included; operating expenses as a percent of net sales in the mid 29% range, which we adjusted mid-year to be the mid 28% range. Our gross profit margin between 38% to 39% for our concrete business, and the European operating income margin of approximately 5%, excluding our SAP severance and goodwill impairment.
In relationship to the 2018 goals, we achieved the following. An operating expense, as a percent of net sales of 28.6%, an impressive 270 basis point improvement year-over-year. Concrete gross margin profit of 37% or slightly below our target. This reflects a significant improvement of 240 basis points year-over-year. We remain very pleased with the direction of our new concrete strategy that we began implementing in 2017, with a focus on more profitable products and market.
Europe operating income margin of approximately 4.5%, excluding one-time items, this was slightly below our target, and we are currently reviewing additional opportunities and levers to improve Europe's bottom line in 2019. Our team worked hard to execute against these goals and the commitment from all of our employees to achieve our 2020 targets, is a testament to the strong company culture we have here at Simpson. I'd like to acknowledge and thank all employees for their hard work and dedication.
I'd now like to take a few minutes to discuss some highlights from our fourth quarter financial results, before providing an update on operational [REMOVIDO]s. Fourth quarter net sales increased 4% year-over-year to $241.8 million, primarily due to increases in our average selling prices. Sales volumes in the fourth quarter was down on a year-over-year basis, as a result of softer U.S. housing starts and the timing of project based sales in Europe.
U.S. housing starts, which are a leading indicator for approximately 60% of our business, were softer in the fourth quarter versus the comparable period last year, including in the Western and Southern regions of the US, where we provide meaningful amount of content into those homes due to stricter building design requirements from wind and earthquake concerns. We believe demand may have been impacted by uncertainty in regard to economic factors, given the extreme market volatility and the client experience in December. We acknowledge there is a hesitation in the market attributed to unpredictable economic conditions, labor shortages, and the potential for rise in interest rate. That said, there are many underlying factors to support healthy U.S. housing starts, including strong consumer confidence, extremely low unemployment rates, and low level of housing stock availability. Looking ahead, we expect demand to remain relatively stable. Demand in January was strong, a further indication that December buying patterns may have been postponed due to the short-term uncertainty. Over the long-term, we remain cautiously optimistic that the U.S. housing starts will increase at an annual mid-single-digit rate over the next few years.
Our fourth quarter gross profit dollars were pressured by a combination of increased battery, material and labor costs, as well as one-time impacts related to inventory reduction [REMOVIDO]s. This resulted in a fourth quarter gross profit margin of 40.7% and ultimately impacted our full-year gross profit margin of 44.5% versus our projection of between 45.5% to 46%. Brian will discuss this in more detail shortly.
While our full-year gross profit margin came in below our expectation, it is important to reiterate that our gross profit margin remains one of the highest in the industry. Much of this is attributed to our long-standing trusted brand reputation, which is built through proprietary testing capabilities, deep industry relationships, and superior customer service.
Now, I'd like to provide an update on our key operating [REMOVIDO]s, which focus on rationalizing our cost structure to drive improved profitability, growing our market share and improving our technology and infrastructure to provide best-in-class service to our customers for years to come. In regards to growing our market share, the introduction of our mechanical anchor products into the Home Depot stores continues to progress. Throughout much of 2018 the roll-out occurred at a slower pace than our original expectations, due to space constraints at the Home Depot stores.
Our mechanical anchor products were set in 91 Home Depot stores in 2018, bringing the total number to 373 Home Depot locations. Currently Home Depot has identified an additional 400 stores that we expect will be set by the end of the second quarter. We continue to anticipate the full roll-out into all 1,900 stores to be accomplished by the end of 2020, representing a $30 million annualized revenue opportunity once complete.
In Europe, the roll-out of the complete line of Gbo fastener products into the Nordic region and France is progressing on plan. And we continue to track in line with expectations, as it relates to increasing our presence in wood connectors in the Nordic area.
Now moving to operational updates. In an effort to rightsize our product offerings, we have developed a three-phase SKU reduction program. Phase 1 was completed at the end of 2017, and involved eliminating approximately 10,000 non-moving SKUs from our ERP system. Throughout the course of 2018, we focused on Phase 2 of this program, which involves the identification and removal of over 2,500 slow moving SKUs. I'm pleased to report that this phase was completed at the end of 2018, and we have successfully converted all customers over to other products in our line.
At the start of 2019, we began focusing on the final Phase, which involves a further reduction of our SKUs. We believe, our newly implemented SAP system, as well as our learnings from our continued partnership with our external lean consultant will enable us to improve our management of inventory and purchasing practices.
Our goal is an additional reduction of our product offering by approximately 25% by the end of 2020. While we continue to focus on improving our inventory turns, we are subject to fluctuating raw material pricing and tariff uncertainties in the marketplace, which are areas out of our business that we cannot control.
As of December 31, 2018, our inventory balance was approximately $276 million, an increase of $23 million or 9% year-over-year, as a result of increase in steel prices along with duties and tariffs on our finished goods from China. In the third quarter of 2018, we built our raw material position in an effort to mitigate the impact of steel price increases and availability. Currently, we believe, steel prices will remain stable in the first quarter of 2019, and we will continue to be cautious about our steel inventory.
During 2018, we worked with the management consultants to uncover additional areas to enhance our overall efficiencies. Based on their findings, we had implemented programs to improve our operating expenses and working capital, and will incur some success-based fees in 2019 based on the benefits that we receive. We are pleased with the outcome of this partnership and look forward to realizing these efficiencies from the findings on a go-forward basis.
In 2019, our consultant activity will focus primarily on additional lean [REMOVIDO]. Our SAP implementation continues on track toward our companywide implementation goal for completion in 2021. We remain focused on rolling out SAP technology in our remaining U.S. branches, which we expect will take until early 2020 to complete.
In summary, I'm very pleased with our 2018 results and operational execution. Looking ahead, we are cautiously optimistic housing starts will remain at a healthy level. We are pleased with the solid demand we experienced in January, and we are monitoring the more severe weather conditions, we are currently experiencing compared to the year-ago period, which was unusually dry and a warmer winter. We remain committed to executing against our 2020 plan, and focusing on the areas of our business that we can control to ensure long-term sustainable growth, enhanced operating leverage and profitability with a goal of continuing to return capital to our valued shareholders through share repurchase and dividends.
Simpson Manufacturing Inc (SSD) Q4 2018 Earnings Conference Call Transcript -- The Motley Fool
