Why is the first shower of the day is colder than the second?
This manual for a State Select gas-fired water heater states "Due to the nature of the typical gas water heater, the
water temperature in certain situations may vary up to
30°F higher or lower at the point of use such as, bathtubs,
showers, sink, etc.
This means that when the temperature adjustment dial is
set at the mark approximating 120°F, the actual water
temperature at any hot water tap could be as high as
150°F or as low as 90°F." (page 16).  

Given your low temperature setting, it seems pretty likely that you are experiencing the expected behavior for this unit.   You might consult a plumber to see if you could get a more consistent temperature by setting the thermostat higher and installing a mixing valve to regulate the temperature to your desired level.    This might also give you an option to have hotter water available to certain locations (i.e., dishwasher) that don't present a risk to your kids.