This is highlighted by better-than-expected decremental margins in the quarter as well as ongoing strengthening of our balance sheet following strong cash generation performance and a nearly 30% reduction in net debt levels over the prior year.
As a result, the year-over-year organic sales decline of 13.4% in the quarter improved notably from the 18.4% decline last quarter.
In addition, we saw several industry verticals return back to growth during the quarter with 10 of our top 30 verticals up year-over-year versus only two last quarter.
Organic sales through our first 18 business days of October are down by mid-teens percent over the prior year.
However, it's important to note that visibility remains limited ahead of the seasonally slower winter months as customers continue to manage through an uncertain macro and pandemic outlook near term.
To provide more detail on our first quarter, consolidated sales decreased 12.7% over the prior year quarter.
Acquisitions contributed 1.1% growth, partially offset by an unfavorable foreign currency impact of 0.4%.
Netting these factors, sales decreased 13.4% on an organic basis with a like number of selling days year-over-year.
Sales in our Service Center segment declined 14.9% year-over-year or 14.4% on organic basis.
However, the 14% organic decline year-over-year represents an improvement from the 21% decline during last quarter.
In addition, average daily sales rates were up more than 4% sequentially and above the normal seasonal progression.
Within our Fluid Power & Flow Control segment, sales decreased 7.4% over the prior year quarter with our August 2019 acquisition of Olympus Controls, contributing 3.8 points of growth on roughly half a quarter of remaining inorganic contribution.
On an organic basis, segment sales declined 11.2%, reflecting lower demand across Industrial, Off-Highway Mobile and process-related end markets.
As highlighted on Page eight of the deck, gross margin of 28.9% declined approximately 50 basis points year-over-year or 40 basis points when excluding noncash LIFO expense of $1.1 million in the quarter and $0.4 million in the prior year quarter.
That said, on a sequential basis, gross margins improved 13 basis points or 17 basis points when excluding LIFO expense, and we're slightly ahead of our expectations.
Selling, distribution and administrative expenses declined 13.4% year-over-year or approximately 15% when excluding incremental operating costs associated with our Olympus Controls acquisition.
Both of these figures exclude $1.5 million of nonroutine cost in the prior year quarter.
Combined with improving sales trends during the quarter, we reported a 9.5% decremental margin on operating income during our recent fiscal first quarter, which exceeded our expectations and highlights the adaptability and durability of our operating model.
EBITDA in the quarter was $67.6 million, down 13.6% compared to adjusted EBITDA of $78.2 million in the prior year quarter while EBITDA margin was 9%, down a modest 10 basis points over the prior year despite the double-digit sales decline.
We reported net income of $34.8 million or $0.89 per share, down from adjusted net income of $39.9 million or $1.02 per share in the prior year quarter.
During the first quarter, cash generated from operating activities was $81.8 million while free cash flow was $78.2 million or approximately 225% of net income.
This was up from $50 million and $45 million, respectively, as compared to the prior year quarter, and represents record first quarter cash generation.
Given the strong cash flow performance in the quarter, we ended September with over $271 million of cash on hand with approximately 75% of that unrestricted U.S. held cash.
Of note, this is after utilizing $62 million of cash during the quarter to pay down debt.
We have now paid down over $200 million of debt since early 2018, including over $80 million the past year.
Our net debt is down nearly 30% over the prior year, and net leverage stood at 2.1 times adjusted EBITDA at quarter end, below the prior year quarter level of 2.3 times and the prior year level of 2.6 times.
Additionally, our revolver remained undrawn with approximately $250 million of capacity and an additional $250 million Accordion option.
That said, to provide some directional views near term based on month-to-day trends in October and assuming normal sequential patterns in daily sales rates for the balance of the quarter, we would expect fiscal second quarter 2021 sales to decline 13% to 14% organically on a year-over-year basis.
If customers reduce underlying production activity, or extend these plant shutdowns, this could drive organic declines that are greater than the 13% to 14% assumption.
On the other hand, if we see ongoing improvement in underlying industrial activity and further traction with our internal growth initiatives, organic declines could be better than the 13% to 14% assumption.
In addition, we expect our recent acquisition of ACS to contribute approximately $6 million in sales during our fiscal second quarter.
Based on the 13% to 14% organic sales decline, we believe a low double-digit to low-teen decremental margin is an appropriate benchmark to use for our second quarter.
We also note an effective tax rate of 23% to 25% is still an appropriate assumption near term.
We remain confident in our cash generation potential over the cycle and reiterate our normalized annual free cash target of at least 100% of net income.
This is integrated into our long-term targets of $4.5 billion in sales and 11% EBITDA margins, which are well within our capability and provide the framework for accelerating earnings power and stakeholder returns long term.

Summary:
However, it's important to note that visibility remains limited ahead of the seasonally slower winter months as customers continue to manage through an uncertain macro and pandemic outlook near term.
We reported net income of $34.8 million or $0.89 per share, down from adjusted net income of $39.9 million or $1.02 per share in the prior year quarter.
That said, to provide some directional views near term based on month-to-day trends in October and assuming normal sequential patterns in daily sales rates for the balance of the quarter, we would expect fiscal second quarter 2021 sales to decline 13% to 14% organically on a year-over-year basis.
If customers reduce underlying production activity, or extend these plant shutdowns, this could drive organic declines that are greater than the 13% to 14% assumption.
On the other hand, if we see ongoing improvement in underlying industrial activity and further traction with our internal growth initiatives, organic declines could be better than the 13% to 14% assumption.
Based on the 13% to 14% organic sales decline, we believe a low double-digit to low-teen decremental margin is an appropriate benchmark to use for our second quarter.