Our global A.O. Smith team delivered first quarter earnings per share of $0.60 on a 21% increase in sales, demonstrating solid execution, despite pandemic and weather-related challenges in our supply chain and operations, along with rapidly rising material costs.
North America water treatment grew 12%, driven by continued consumer demand for home improvement products, which provides safe drinking water in the home.
Boiler sales grew 12%, as we have seen strong demand, particularly within commercial boilers, as a result of completed projects carried over from 2020, as well as a resilient replacement demand.
In China, sales increased over 100% in local currency, driven by higher consumer demand and the easy comparison compared with the pandemic disrupted first quarter of 2020.
First quarter sales of $769 million increased 21%, compared with 2020, largely due to significantly higher China sales.
As a result of higher sales, first quarter net earnings increased 89% to $98 million or $0.60 per share compared with $52 million or $0.32 per share in 2020.
Sales in the North America segment of $553 million increased 4% compared with the first quarter of 2020.
Higher commercial boiler service parts and tankless water heater sales in the US, improved water heater sales in Canada, a 12% price -- 12% growth in water treatment sales and inflation related price increases on water heaters in the US were partially offset by lower US residential and commercial water heater volumes.
Rest of the World segment sales of $222 million increased over 100% from the first quarter of 2020 driven by stronger consumer demand in each of our major product categories in China.
Currency translation of China sales favorably impacted sales by approximately $14 million.
On slide 6, North America segment earnings of $130 million increased 3% compared with the first quarter of 2020.
Segment operating margin of 23.6% was slightly lower than the first quarter of 2020.
Rest of the World segment earnings of $12 million increased significantly compared with the first quarter of 2020, which was negatively impacted by the pandemic.
As a result, segment operating margin of 5.3% improved significantly from negative 38.3% in the first quarter of 2020.
Our corporate expenses of $15 million were similar to the first quarter of 2020.
Our effective tax rate of 22.5% was 110 basis points lower than the prior year largely due to geographical differences in pre-tax income.
Cash provided by operations of $104 million increase -- or during the first quarter was higher than the first quarter of 2020, primarily as a result of higher earnings in 2020 compared with the prior year.
Our cash balances totaled $660 million at the end of the first quarter and our net cash position was $559 million.
Our leverage ratio was 5% as measured by total debt to total capital at the end of the first quarter.
We completed refinancing our $500 million revolver credit facility on April 1st of this year.
During the first quarter, we repurchased approximately 1.1 million shares of common stock for a total of $67 million.
The midpoint of our range represents an increase of 20% compared with the 2020 adjusted results.
We expect cash flow from operations in 2021 to be between $475 million and $500 million compared with $560 million in 2020.
Our 2021 capital spending plans are between $85 million and $90 million and our depreciation and amortization expense is expected to be approximately $80 million.
Our corporate and other expenses are expected to be approximately $52 million, which is similar to 2020.
Our effective tax rate is assumed to be approximately 23% in 2021.
Average outstanding diluted shares of 160 million assumes $400 million worth of shares are repurchased in 2021.
As a result of a surge in orders approximately 30% higher than the first quarter last year, our lead-times have further extended.
We have not changed our outlook for full year US residential heater industry volumes and continue to project a full year volume will be down 2% or 200,000 units in 2021, a small retracement from the record volume shipped in 2020.
We expect commercial industry water heater volumes will decline approximately 4% as pandemic impacted business delay or defer new construction and discretionary replacement installation.
Steel has increased 25% since we announced our April 1st water heater price increase.
We announced a third price increase in late March on water heaters effective June 1 at a blended rate of 8.5%.
Our strategy continues to expand distribution to Tier 4 through 6 cities is on track.
We see improvement in consumer trends toward trading up for higher priced products across all product categories, driven by differentiated new products launched in the last 12 to 24 months.
We expect year-over-year increase and local currency sales between 18% to 20% in China.
We assume China currency rates will remain at current levels adding approximately $50 million and $3 million to sales and profits over the prior year respectively.
We have nearly doubled our growth projections and our outlook for our North America boiler sales for mid-single-digit growth to approximately 10% growth based on a strong first quarter, strong backlog, and visibility into coating activity.
In 2020, condensing boilers were 39% of the commercial boiler industry.
We continue to project 13% to 14% full year sales growth in our North America water treatment products, similar to that which we have seen in the first quarter.
We believe margins in this business could grow by 100 to 200 basis points higher than the nearly 10% margin achieved in 2020.
While India is challenged with recent COVID case resurgence, we project 2021 full year sales to increase over 20%, compared with 2020 to incur a smaller loss of $1 million to $2 million.
We project revenue will increase between 14% to 15% in 2021, as strong North America water treatment, boiler and China sales, enhanced by pricing action, more than offset expected weaker North America water heater volumes.
Our sales growth projections include approximately $50 million of benefit from China currency translation.
We expect North America segment margin to be between 23% and 23.5% and Rest of World segment margins to be between 7% and 8%.
We estimate replacement demand represents 80% to 85% of US water heater and boiler volumes.

Summary:
Our global A.O. Smith team delivered first quarter earnings per share of $0.60 on a 21% increase in sales, demonstrating solid execution, despite pandemic and weather-related challenges in our supply chain and operations, along with rapidly rising material costs.
First quarter sales of $769 million increased 21%, compared with 2020, largely due to significantly higher China sales.
As a result of higher sales, first quarter net earnings increased 89% to $98 million or $0.60 per share compared with $52 million or $0.32 per share in 2020.
We project revenue will increase between 14% to 15% in 2021, as strong North America water treatment, boiler and China sales, enhanced by pricing action, more than offset expected weaker North America water heater volumes.