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Text: Our conference call slides have been posted on our website and provide additional information that you may find helpful.
Sales were $454 million in the quarter, an increase of 22% from the first quarter of last year and an increase of 18% at consistent translation rates.
The effect of currency translation added 4 percentage points of growth or approximately $11 million in the first quarter.
Reported net earnings totaled $105.7 million for the quarter or $0.61 per diluted share.
After adjusting for the impact of excess tax benefits from stock option exercises, net earnings totaled $101.6 million or $0.58 per diluted share.
Gross margin rates were strong in the quarter, up 120 basis points from the first quarter of last year as the favorable effects from currency translation, realized pricing and factory volumes were partially offset by the unfavorable impact on material costs and mix related to the significant growth in the lower margin contractor segment.
We saw material cost increase throughout the quarter, which negatively impacted our gross margin rate.
At current factory volumes, we expect that pricing and strong factory operating performance will continue to offset higher material costs for the remainder of the year.
We also experienced supply chain disruptions in the quarter with regards to logistics capacity and component availability across most of our factories.
The purchasing and manufacturing teams are working to address these disruptions and we are not currently losing orders or have had any of our manufacturing lines shutdown.
We expect these challenges to continue in the second quarter.
Operating expenses increased $10 million in the quarter, including $2 million related to currency translation, $5 million of increases in sales and earnings based expenses and $2.5 million in new product development as we continue to invest in our growth initiatives.
Other non-operating expenses decreased $5 million due to an improvement in the market valuation of investments held to fund certain retirement benefit liabilities.
The effective tax rate was 16% for the quarter, which is 5 percentage points higher than the first quarter of last year, due to a decrease in excess tax benefits related to stock option exercises.
Cash flows from operations totaled $102 million, compared to $54 million in the first quarter of last year.
The majority of this increase was due to an increase in earnings in the quarter.
Capital expenditures were $21 million and dividends paid were $31.6 million.
A few comments as we look forward to the rest of the year.
Based on current exchange rates, the effect of currency translation will continue to be a tailwind for us with the full year effect estimated to be 2% on sales and 5% on earnings with the most significant impact occurring in the first half of the year.
We expect unallocated corporate expense to be approximately $30 million and can vary by quarter.
Our 2021 full year tax rate is expected to be approximately 18% to 19%, excluding any effect from excess tax benefits related to stock option exercises.
Capital expenditures are estimated to be $140 million, including $90 million for facility expansion projects.
Finally, 2021 will be a 53 week year with the extra week occurring in the fourth quarter.
Q1 was a solid quarter as we delivered growth in every segment and every region with the exception of process in EMEA which was down low-single-digits.
In addition to good performance by our commercial teams, I want to specifically recognize our manufacturing, purchasing, warehousing and logistics folks for successfully dealing with both external supply chain issues and rising material prices.
Contractor continued strong performance with record Q1 sales and earnings as revenue growth in all regions exceeded 30% for the quarter.
Residential construction activity remains solid and the home improvement market is robust.
Contractor North America continues to see strong out-the-door sales in both propane and home center and we're working hard to keep up with the demand.
Favorable volume and continued discretionary expense management drove solid operating earnings during the quarter.
The outlook for the Contractor business remains positive for the year, however, comparisons do get much tougher in the second half.
The Industrial segment grew low teens during the quarter, with improvement in all regions.
Order rates were strong throughout the quarter, with growth in all major product categories.
Overall demand in this segment remains broad-based with many of our key end markets improving as customer facilities begin to reopen to outside vendors.
Process segment sales grew in Q1 with improving end market conditions, particularly in the Americas and Asia Pacific.
All major product categories were up with the exception of oil and gas and incoming order rates accelerated throughout the quarter.
Similar to industrial end market growth was broad-based and benefited from improved factory access.
A couple of comments on our outlook as we head into the second quarter.
Incoming orders remain solid and last year's second quarter was our trough.
So we expect a good Q2.
Second half comparisons will get significantly more difficult as our business accelerated in Q3 and Q4.
Although the second half economic environment is uncertain, we will continue to aggressively pursue our key long-term growth strategies and investments.

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compname reports qtrly diluted net earnings per common share, adjusted $0.58.
qtrly diluted net earnings per common share $0.61.
qtrly diluted net earnings per common share, adjusted $0.58.

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