Charles T. Lauber
Executive Vice President and Chief Financial Officer at A. O. Smith
Thank you, Kevin, and good morning everyone. I'm on Slide 7. Second quarter sales in the North America segment were $791 million, a 9% increase compared with 2023, driven by higher water heater and boiler volumes as well as year-over-year pricing actions. North America segment earnings of $198 million increased 2% compared with 2023 adjusted segment earnings.
The higher segment earnings were primarily driven by increased volumes and pricing that were partially offset by higher steel costs and higher selling expenses to support our growth initiatives, including the launch of our gas-tankless products. Segment margin was 25.1%, a decrease of 180 basis points year-over-year. The lower segment margin was due to the reasons I reviewed with regard to segment earnings, which more than offset higher volumes in the quarter.
Moving to Slide 8. Rest of the World segment sales of $245 million were essentially flat to last year and included unfavorable currency translation of approximately $7 million, primarily related to China as well as intersegment sales associated with recently launched tankless water heaters. Segment third-party sales increased 3% on a constant currency basis. The increase was partially driven by higher sales of kitchen and HVAC products, partially offset by lower sales of residential water treatment products in China.
India sales grew 16% in local currency in the quarter, driven by growth in both water heater and water treatment categories with particularly strength in our e-commerce, retail and commercial end markets. Rest of the World segment earnings of $26 million decreased slightly compared to segment earnings in 2023, primarily due to the unfavorable product mix and sales promotions in China. Third-party segment operating margin was 11.5%, slightly lower than segment margin in 2023.
Please turn to Slide 9. We generated free cash flow of $119 million during the first half of 2024, a decrease from the same period last year, primarily as a result of higher inventory and accounts receivable balance as well as higher incentive payments associated with record sales and profits last year, which more than offset higher earnings and higher trade payable balances. Capital expenditures increased $21 million year-over-year, driven by our expansion projects. Our cash balance totaled $233 million at the end of June and our net cash position was $93 million. Our leverage ratio was 6.8% as measured by total debt to total capital.
Now let's turn to Slide 10. In addition to returning capital to shareholders, we continue to see opportunities for organic growth, innovation and new product development across all of our product lines and geographies. As Kevin mentioned earlier, we signed an agreement last week to acquire Pureit from Unilever for $120 million. Pureit offers a broad range of residential water purification solutions and has annual sales of approximately US$60 million, primarily in India.
The addition of Pureit strengthens our leadership position as a global supplier of premium water treatment products and will double our market penetration in South Asia. The acquisition will also support our corporate strategy by enhancing our premium product portfolio and distribution footprint.
Please turn to Slide 11, in our 2024 earnings guidance and outlook. We narrowed our 2024 EPS outlook to an expected range of $3.95 to $4.10 per share. The mid-point of our EPS range has not changed and represents an increase of 6% compared with 2023 adjusted EPS. Our outlook is based on a number of key assumptions, including, our guidance assumes that our steel cost in the full year 2024 will be roughly flat to 2023. Our outlook assumes non-steel material costs are similar in 2024, as they were in 2023.
Our guidance also assumes a relatively stable supply chain environment, similar to what we experienced throughout 2023. We began shipping our internally designed and manufactured gas-tankless products in the second quarter. These products are being manufactured in our China facility until our North America capacity is completed in 2025. Associated import tariffs and other launch costs will impact North America margins by approximately 50 basis points in 2024. The tariff will be eliminated when production moves towards Mexico.
For the year, capex should be between $105 million and $115 million, an increase over the last several years due to our capacity expansion projects, including our gas-tankless facility in Juarez, expansion of our engineering capabilities in Lebanon, Tennessee, and adding high efficiency commercial water heating manufacturing capacity ahead of the 2026 regulatory changes.
We expect to generate free cash flow of between $525 million and $575 million. Corporate and other expenses are expected to be approximately $65 million. Our effective tax rate is estimated to be approximately 24%. And we expect to repurchase approximately $300 million of our shares of stock resulting in outstanding diluted shares of $147 million at the end of 2024.
I'll now turn the call back over to Kevin, who will provide more color on our key markets and top line growth outlook and segment expectations for 2024, while staying on Slide 11. Kevin?
