This resulted in an adverse effect on gross profit margin during the quarter of approximately $3.7 million. In addition, the Company recorded a charge of $0.5 million for customer penalties due to these product shipment issues. The Company also believes that customers withheld more than $4.0 million in product orders during the quarter because of issues surrounding product shipments in the United States.
Subsequent to quarter-end the Company's operations in the United States returned to near normal levels of customer order processing and product shipments.
Chief Executive Officer, Marcello Bottoli, stated: "The Company had a solid first quarter, delivering robust sales growth, significant gross margin improvement and good progress in working capital efficiency. Net first quarter sales rose 9.8% year-on-year while quarterly gross margins increased 200 basis points to 53.1%, compared to prior year."
Sales growth of $23.7 million to $264.7 million was achieved despite an 11.0% sales decline in North America, where implementation of our new ERP software in the United States slowed shipments for a portion of the quarter. Subsequent to quarter end, the United States resumed more normal shipping patterns.
"Overall, I am pleased with this performance, which demonstrates continued progress in the implementation of our strategic plan." Richard Wiley, Chief Financial Officer, commented: "The Company's strategy of streamlining operations while delivering top line growth contributed to a 5.4% year-on-year increase in first quarter Adjusted EBITDA, to $30.8 million."
The 5.0% increase in first quarter sales on a constant currency basis compared to the prior year was driven primarily by economic growth in Asia, price increases in Europe and contributions from joint ventures in Asia and the U.S. that were completed in the second quarter of fiscal 2007. Execution of our strategic plan to improve margins resulted in a 200 basis point increase in gross profit margins to 53.1% in the first quarter from 51.1% in the prior year.
"This was driven by a combination of price increases, improved sales mix and lower fixed manufacturing and direct product costs. In the last twelve months, average net working capital efficiency improved 70 basis points over the prior year to 15.5% of sales as of April 30, 2007. The Company's debt net of cash position as of April 30, 2007 was $430.5 million."