John Sznewajs
Vice President & Chief Financial Officer at Masco
Thank you, Keith, and good morning, everyone. As Dave mentioned, my comments today will focus on adjusted performance, excluding the impact of rationalization and other one-time items. Turning to Slide 7. We delivered another exceptional quarter as we capitalized on strong consumer demand, resulting in continued growth and increased backlogs. As a result, sales increased 24% with currency and net acquisitions, each contributing 3% to growth.
In local currency, North American sales increased 15% or 12%, excluding acquisitions. Strong volume growth in North American faucets, showers and spas led this outstanding performance. In local currency, international sales increased a robust 50% or 49%, excluding acquisitions and divestitures. Gross margin was 36.3% in the quarter, up 50 basis points as we leverage the strong volume growth. Our SG&A as a percentage of sales improved 10 basis points to 16.2% due to our operating leverage. During the quarter, certain expenses such as headcount, marketing, and travel and entertainment increased as planned. We expect SG&A as a percent of sales to increase in the third and fourth quarters, as these costs normalize. We delivered strong second quarter operating profit of $438 million, up $94 million or 27% from last year, with operating margins expanding 60 basis points to 20.1%. Our EPS was $1.14 in the quarter, a 34% increase compared to the second quarter of 2020, due to volume leverage, lower interest expense and lower share count.
Turning to Slide 8. Plumbing growth accelerated in the quarter with sales up 53%. Currency contributed 5% to this growth and acquisitions, net of divestitures, contributed another 4%. North American sales increased 47% in local currency or 41%, excluding acquisitions. Delta led this outstanding performance, delivering another quarter of robust double digit growth. With a strong brand recognition and market leadership, Delta continues to drive strong consumer demand across all its product categories and channels.
Watkins Wellness also significantly contributed to growth in the quarter with both demand and our backlog remained strong. International plumbing sales increased 50% in local currency or 49%, excluding acquisitions and divestitures. Hansgrohe delivered robust growth as demand continues to improve across Europe and numerous other countries. Hansgrohe's key markets of Germany, China, UK and France, all grew strong double digits in the quarter. Segment operating margins expanded 230 basis points to 20.6% in the quarter, with operating profit of $274 million, up $115 million or 72%. The strong performance was driven by incremental volume, favorable mix and cost productivity initiatives, partially offset by an unfavorable price/cost relationship and higher spend on items such as travel and entertainment, marketing and growth initiatives.
During the quarter, we also completed the divestiture of HUPPE, a small shower enclosure business based in Germany. HUPPE sales were approximately EUR70 million in 2020. This transaction closed on May 31, and net proceeds were not material. Given our second quarter results and current demand trends, we now expect plumbing segment's sales growth for 2021 to be in the 22% to 24% range, up from our previous guidance of 15% to 18%. Finally, due to our improved sales outlook, we are increasing our full year margin expectations to approximately 18.5%, up from our previous guide of approximately 18%.
Turning to Slide 9. Decorative architectural declined 5% for the second quarter and was 6%, excluding the benefit from acquisitions. DIY paint business declined double digits in the quarter against the healthy high-teens comp due to moderating demand and raw material supply tightness as resin plants affected by storms in the Texas Gulf Coast region in the first quarter continued to face production challenges. We expect these raw material headwinds to persist in the third quarter and now anticipate our DIY paint business to be down low-single digits for the full year.
To help mitigate these challenges, we are working with our existing suppliers and qualifying new sources for materials to meet the demand of our customers which remains strong. I want to thank our supply chain teams which have done an outstanding job managing through these challenges. Our PRO paint business delivered strong double digits growth in the quarter, as consumers are increasingly willing to allow professional paint contractors in their homes. We expect demand in this channel to remain strong and now anticipate low-double digit growth for the PRO paint business for the full year, up from our previous expectation of high-single digits as PRO paint contractors' order books continue to grow.
Our builders' hardware and lighting businesses each delivered growth in the quarter, as they continue to capitalize on increased consumer demand. Segment operating margins were 22.1% and operating profit in the quarter was $188 million due to lower volume, partially offset by cost productivity initiatives. For full year 2021, we now expect decorative architectural segment's sales growth will be in the range of 2% to 5%, down from 4% to 9% due to lower than expected second quarter sales and persistent raw material constraints. We continue to expect segment operating margins of approximately 19% as productivity initiatives in pricing help offset higher input costs.
Turning to Side 10. Our balance sheet is strong with net debt to EBITDA at 1.3x. We ended the quarter with approximately $1.8 billion of balance sheet liquidity, which includes full availability of our $1 billion revolver. Working capital as a percent of sales, including our recent acquisitions, was 16.9%, an improvement of 120 basis points over prior year.
As we discussed last quarter, we terminated and annuitized our U.S. qualified defined benefit plans in the second quarter and had an approximate $100 million final cash contribution to the plans to complete this activity. This removes approximately $140 million of pension liabilities from our balance sheet, and it will benefit our free cash flow by approximately $50 million through reduced cash contributions, starting in 2022. Also, we received approximately $166 million from the redemption of our preferred stock related to the recent sale of our former cabinet business.
Finally, as Keith mentioned earlier, as of today, we repurchased 13.1 million shares in 2021 for $750 million. We expect to deploy an additional $250 million for share repurchases or acquisitions for the remainder of this year. Collectively, these actions demonstrate our confidence in our business and our commitment and ability to further strengthen our balance sheet, while aggressively returning capital to our shareholders.
Turning to our full year guidance, we have summarized our updated expectations for 2021 on Slide 11. Based on our second quarter performance and continued robust demand, we now anticipate overall sales growth of 14% to 16%, up from 10% to 14% with operating margins of approximately 17.5%, up from 17%.
Lastly, as Keith mentioned earlier, our updated 2021 EPS estimate range of $3.65 to $3.75 represents 19% EPS growth at the midpoint of the range. This assumes the 252 million average diluted share count for the full year. Additional modeling assumptions for 2021 can be found on Slide 14 in earnings deck.
With that, I'll now turn the call back over to Keith.
