He joined Donaldson last week after two decades on the sell side, which included 15 years of covering our company.
First quarter sales were up 3% sequentially, which is not typical seasonality, signaling that the worst of the impact from the pandemic on our business may be behind us.
Gross margin was up 60 basis points from the prior year resulting in the highest first quarter gross margin in four years, and the best sequential improvement in at least a decade.
We reduced operating expenses by 5% while maintaining investments in our strategic growth priorities, particularly as they relate to the Industrial segment.
And altogether, we had a decremental operating margin of only 4% which we view as very positive given the uneven economic environment.
Total sales were down 5.4% from prior year or 6.4% in local currency.
On-Road sales were down 21% in the quarter, which is still a steep decline, but notably better than the past few quarters.
Although Class 8 truck production in the US remains depressed, order rates are increasing and third party forecast for the next calendar year suggest the Class 8 recovery is on the horizon.
We had a very strong quarter in China with Off-Road sales up more than 50%.
First quarter sales and aftermarket were down only slightly from the prior year and they were up 6% from the prior quarter.
In Europe, first quarter sales were up 4% in local currency as conditions improved in Western Europe.
In China, first quarter sales of Engine aftermarket were up more than 30% reflecting strong growth in both channels.
PowerCore is our most mature example of how our razor to sell razor blade strategy works and the brand is still going strong after 20 years.
First quarter sales were down about 6% including a benefit from currency of about 2%.
While these type of optimization initiatives are standard work for us, I'm calling it out because during our fourth quarter call, we said Process Filtration sales were about $50 million of fiscal 2020.
Following our reorganization that number is more like $68 million.
Sales of Gas Turbine Systems were up 11%, driven by strong growth of replacement parts and we continue to gain share.
Versus the prior year operating margin was up 50 basis points, driven entirely by gross margin.
That translates to a decremental margin of 4%, but that's probably not the level to expect over time.
First quarter sales were up 3% from the fourth quarter and our operating profit was up almost 6%.
That yields in incremental margin of 24.5%, which is in line with our longer term targets from Investor Day and several points ahead of our historic average.
First quarter gross margin increased 60 basis points to 35% despite the impact from the loss of leverage and higher depreciation.
Operating expenses were down 5% from the prior year, which resulted in a slight increase as a rate of sales.
Moving down the P&L, first quarter other expense of $1.5 million compared with income in the prior year of $2.6 million.
We returned more than $40 million of cash to shareholders last quarter, including a repurchase of 0.3% of outstanding shares and dividends of $27 million.
We have paid a dividend every quarter for 65 years and we are on track to hit another milestone next month.
So this anniversary signals that we have been increased our dividend annually for the past 25 years.
In terms of sales, we expect second quarter Will end between a 4% decline and a 1% increase from the prior year and that means sales should be up sequentially from the first quarter.
We also expect a year-over-year sales increase in the second half of fiscal '21, and sales are planned to migrate toward a more typical seasonality meaning that second half Will carry slightly more weight than the first.
For our full year tax rate, we are now expecting something between 24% and 26%.
Our long-term target is plus or minus 3% of sales and we would expect our capex to be below that level this year.
We plan to repurchase at least 1% of our outstanding shares which Will opt dilutions [Phonetic] with stock based compensation.
Should we see incremental improvement in the economic environment, it is reasonable to expect that we Will repurchase more than 1% this fiscal year.
Finally, our cash conversion is still expected to exceed 100%.
Baghouses have used the same low-tech solution for decades, and they represent about half of the $3 billion to $4 billion industrial air filtration market.
We are currently competing for projects with an aggregate 10 year value of more than $3.5 billion, telling us the market for innovation is healthy and we have a significant opportunity to win new business.
Our focus is very consistent with what we laid out 18 months ago at our Investor Day.

Summary:
In terms of sales, we expect second quarter Will end between a 4% decline and a 1% increase from the prior year and that means sales should be up sequentially from the first quarter.
We also expect a year-over-year sales increase in the second half of fiscal '21, and sales are planned to migrate toward a more typical seasonality meaning that second half Will carry slightly more weight than the first.