Good morning. This is Aaron Elholzer, Vice President, Investor Relations for The J. M. Smucker Company. Thank you for listening to our prepared remarks on our fiscal 2023 third quarter earnings. After this brief introduction, Mark Smucker, Chair of the Board, President and Chief Executive Officer, will give an overview of the quarters results and an update on strategic initiatives.
Tucker Marshall, Chief Financial Officer, will then provide a detailed analysis of the financial results and our updated fiscal 2023 outlook. Later this morning, we will hold a separate live question and answer webcast. During today's discussion, we will make forward-looking statements that reflect our current expectations about future plans and performance.
These statements rely on assumptions and estimates, and actual results may differ materially due to risks and uncertainties. Additionally, please note we will refer to non-GAAP financial measures management uses to evaluate performance internally.
I encourage you to read the full disclosure concerning forward-looking statements and details on our non-GAAP measures in this morning's press release. Today's press release, a supplementary slide deck summarizing the quarterly results, management's prepared remarks, and the Q&A webcast can all be accessed on our investor relations website at jmsmucker.com.
We invite all interested parties to join us at 9:00 A.M. Eastern Standard Time today for a live question and answer session with management to further discuss our third quarter results and outlook for the full 2023 fiscal year. Please contact me if you have additional questions after today's question and answer session. I will now turn the discussion over to Mark Smucker.
Thank you, Aaron, and good morning, everyone. Following a strong start to the first half of our fiscal year, momentum continued across all our businesses in the third quarter. Enabled by the extraordinary contributions of our people, our strong results reflect the strength of our iconic brands, our focus on execution, and the continued advancement of our strategic priorities. In the third quarter, comparable net sales increased 11%.
Our strong top-line growth was led by our coffee and pet businesses, along with robust growth for the Uncrustables brand. These platforms continue to be key enablers for sustained growth and reflect the strong execution of our strategy of leading in the attractive categories of pet, coffee, and snacking. Adjusted earnings per share decreased 5%, primarily driven by increased cost compared to the prior year.
Given our sustained business momentum and increased visibility into the fourth quarter, we are raising our bottom line guidance. We now expect full year adjusted earnings per share to be in the range of $8.55-$8.75. During the 1/4, brands that were growing or maintaining share accounted for 54% of our U.S. retail sales, compared to 68% during the same period a year ago.
We expect this decline to be temporary as we experience supply chain challenges both in our Meow Mix dry cat food and Smucker's fruit spreads businesses, and the Jif brand continues to rebuild share. We remain confident in our strategy and the strength of our brands and will continue to support them with ongoing marketing investments. Turning now to our segment results.
In pet foods, our momentum continued with comparable net sales up 10% versus the prior year, driven by strong growth across all categories. In dog snacks, growth was led by the Milk-Bone brand, which grew net sales 11%. The Milk-Bone brand continues to drive growth for our market-leading business and the dog snacks category overall through core offerings and premium-positioned innovation.
Milk-Bone continued to significantly outpace the category in the 1/4, with consumer takeaway up 18%. In cat food, momentum for the Meow Mix brand continued as net sales grew 6% in the 1/4. This reflects another strong 1/4 for the brand, with year-over-year net sales growth in 20 of the last 21 quarters. Demand exceeded our ability to fulfill shipments in the 1/4, and we anticipate improved customer in-stocks in the fourth 1/4.
We continue to anticipate double-digit net sales growth for Meow Mix this fiscal year, including continued growth in the fourth 1/4. Our wet food supply chain continues to improve, we will unlock further growth for the Meow Mix brand in wet food.
Recently, we launched Wet 2.0, and we'll support this initiative through a far-reaching campaign across TV, digital, social, influencer, and e-commerce. Meow Mix has been the leader in household penetration and volume share in the dry cat food category over the past year, we will leverage our brand equity in dry food to drive growth in wet food.
In dog food, the Nutrish brand grew net sales 20%, driven by higher pricing and increased volume mix. The brand continues to benefit from some shifts within the category, the optimization of assortment, including offerings with improved nutrition credentials, and a refreshed marketing campaign.
With the anticipated divestiture of several pet food brands, our business will shift from approximately 2/3 pet food and 1/3 pet snacks to approximately 60% pet snacks and 40% cat food, which significantly improves the profit margin and product mix of the business.
The brands we are divesting account for approximately 20% of total company net sales, but only a mid-single digit % of total company profit. We are well-positioned to allocate resources and increase investments into the fast-growing and high-margin dog snacks category, where we have brands and offerings ranging from value to premium. In coffee, net sales growth of 11% was driven by all brands in our market-leading at-home coffee portfolio, underscoring the advantages of our broad product offerings.
Our results were strong year-over-year, we continued to drive sequential volume and margin improvement in the third quarter, supported by stabilization of costs and optimized promotions during the winter holidays. Our coffee portfolio, which features 3 of the top eight brands in the category, grew dollar share more than any other branded manufacturer for the seventh consecutive 1/4 and continued to outpace the at-home coffee category.
The Folgers brand continued its momentum with Double-Digit net sales growth. It was the Fastest-Growing brand in dollar share, increasing over 1/2 a point during the 1/4 and has achieved dollar share growth for 4 consecutive quarters. Folgers continued to maintain double the volume share of any other brand in the category. Café Bustelo was the fastest-growing brand in the At-Home coffee category and increased an impressive 28% in consumer takeaway.
The brand grew market share in both dollars and volume during the 1/4 and has experienced 7 consecutive quarters of Double-Digit dollar sales growth. The Dunkin' brand grew net sales modestly, largely driven by category dynamics within the overall premium segment.
With increased price points due to persistent input cost inflation, the premium segment has experienced greater elasticity than others in the category. Price gaps to competitors have continued to narrow, and promotional investments planned for the fourth 1/4 are anticipated to improve volumes. We continue to remain confident in the overall health of the Dunkin' brand, its leadership position, and our long-term outlook for growth.
Overall, At-Home coffee remains strong, with at-home consumption representing 71% of all coffee drinking occasions. We expect the category to remain resilient as macroeconomic conditions and changes in consumer habits all largely benefit at-home coffee.
We are uniquely positioned in the U.S. Retail Coffee market as our portfolio of brands provides consumers offerings ranging from value to premium. In our U.S. Retail Consumer Foods business, comparable net sales increased 9%, driven by growth for Uncrustables sandwiches and Smucker's fruit spreads, partially offset by a decline in Jif Peanut Butter.
Uncrustables sandwiches continue to deliver exceptional growth, with net sales increasing 38% or nearly $40 million driven by Double-Digit volume mix growth and higher pricing. Total company net sales for Uncrustables sandwiches, including the Away From Home business, were $173 million this 1/4.
The expansion of the Longmont, Colorado facility has begun to provide increased production capacity. As demand continues to outpace supply, we expect strong Double-Digit growth in both sales and volume in the fourth 1/4, which would be 9 consecutive fiscal years of Double-Digit net sales growth.
In peanut butter, all Jif SKUs are now back on shelf, and the brand is number 1 in the category with 41 points of dollar share in the 1/4, leading all competitors in household penetration and unit velocities. Given the strong consumer loyalty of the brand, we anticipate strong Year-Over-Year net sales growth in the fourth 1/4. In addition to the strong top-line performance across our U.S.
Retail business, our International and Away From Home businesses also aided our third quarter performance. Momentum continued in our Away From Home business as comparable net sales increased 17%, driven by higher net price realization and favorable volume mix.
Growth was driven by Uncrustables sandwiches as added capacity begins to help meet demand in Away From Home channels. In International, comparable net sales increased 6%.
We will continue to leverage opportunities consistent with our U.S. retail businesses, most notably for Uncrustable sandwiches, which launch in Canada early next fiscal year. Across all our businesses, our third quarter results highlight our focus on our fiscal year 2023 priorities, which include
Driving prioritization and Best-In-Class execution, improving profitability and cost discipline, transforming our portfolio, nurturing and investing in our culture, and improving diversity and fostering inclusion and equity. These strategic priorities will continue to guide our business and positions us to deliver strong results and long-term growth. Let me discuss 1 of our priorities now, transforming our portfolio, including the anticipated divestiture of several pet food brands.
This transaction, along with other recent divestitures from slower growth categories and brands, reflects our commitment to divesting brands and businesses that are no longer consistent with our long-term strategic focus.
In turn, we are streamlining our business, improving profit margin and product mix, while allocating resources toward our key growth platforms, including Uncrustable sandwiches, dog snacks and cat food, and our coffee portfolio and its expansion into new formats.
We're confident in the strategic choices we have made, and our results reaffirm they were the right ones. Our success continues to be powered by our focused strategy, unique culture, outstanding leadership team, and dedicated employees, who I would like to thank for their exceptional contributions to provide the products and brands that consumers love.
Together, we will continue to deliver on our commitment to achieve long-term growth while making a meaningful, positive impact in the world and on the lives of those who count on us. I'll now turn the discussion over to Tucker.
Thank you, Mark. Good morning, everyone. First, I'll begin by giving an overview of our third quarter results. I'll provide details on our updated financial outlook for the remainder of fiscal 2023. Total company net sales increased 8%.
Excluding the impact of divestitures and foreign exchange, net sales increased 11%. The increase in comparable net sales was primarily driven by a 15 percentage point increase from higher net price realization, reflecting list price increases for each of the company's U.S. retail segments and for International and Away From Home, partially offset by a 4 percentage point decrease from volume mix, primarily driven by the U.S. Retail Coffee segment.
Adjusted gross profit increased $27 million or 4% from the prior year, primarily reflecting a favorable net impact of higher net price realization and increased commodity and ingredient manufacturing and packaging costs, inclusive of costs related to the Jif Peanut Butter product recall.
The gross profit increase also reflects a reduced contribution from volume mix and the non-comparable impact of the divested natural beverage ingredients businesses. Adjusted operating income decreased $20 million or 5% from the prior year, reflecting an increase in SD&A expenses.
The increase in SD&A expense was primarily driven by increased marketing investments, higher compensation expense and investments in the Transformation Office. Expenses related to the expanding manufacturing capacity for Uncrustables sandwiches also contributed to the SD&A increase.
Below operating income, net interest expense decreased $2 million primarily due to the net favorable impact of debt repayments and issuance in the prior fiscal year. The adjusted effective income tax rate was 24.8% compared to 25.1% in the prior year.
Factoring in all these considerations, along with diluted weighted average shares outstanding of 107 million, third quarter adjusted earnings per share was $2.21, a decrease of 5% from the prior year. Turning to our segment results, U.S. Retail Pet Foods' net sales increased 9% versus the prior year.
Net sales increased 10%, excluding Non-Comparable net sales in the prior year related to the private label dry pet food divestiture. The net sales increase was led by growth across all segments, including dog food, cat food, and dog snacks.
Higher net pricing actions across the portfolio contributed a 16 percentage point increase to net sales, partially offset by a decreased contribution from volume mix of 5 percentage points, primarily driven by cat food and dog snacks.
U.S. Retail Pet Foods segment profit increased 14%, primarily reflecting a favorable net impact of higher net price realization and increased commodity and ingredient manufacturing and packaging costs, partially offset by increased marketing investment and a reduced contribution from volume mix. Turning to the
U.S. Retail Coffee segment, net sales increased 11% versus the prior year. Higher net price realization increased net sales by 19 percentage points, primarily reflecting list price increases across the portfolio to recover higher commodity costs. A reduced contribution from volume mix decreased net sales by 8 percentage points, primarily driven by the Folgers and Dunkin' brands.
Net sales growth occurred across all brands in the portfolio, led by Folgers growth of 15%, Café Bustelo growth of 20%, and Dunkin' growth of 2%. Our K-Cup portfolio continued its momentum as net sales grew 3% versus the prior year.
U.S. Retail Coffee segment profit decreased 4%, primarily reflecting the decreased contribution from volume mix, partially offset by a favorable net impact of higher net price realization and increased commodity and manufacturing costs. In U.S. Retail Consumer Foods, net sales were in line versus the prior year. Excluding the prior year non-comparable net sales impact for the divested natural beverage and grains businesses, net sales increased 9%.
The comparable net sales increase was driven by higher net price realization of 6%, primarily reflecting list price increases across the portfolio.
An increased contribution from volume mix increased net sales by 3 percentage points, primarily driven by Uncrustables sandwiches. Net sales growth was led by Uncrustables sandwiches and Smucker's fruit spreads, which grew 38% and 12% respectively. This was partially offset by a 6% decline for Jif Peanut Butter.
U.S. Retail Consumer Foods segment profit decreased 5%, primarily reflecting the net impact of higher net price realization and higher manufacturing and packaging costs, inclusive of costs related to the Jif Peanut Butter product recall, increased marketing investments, and the Non-Comparable segment profit in the prior year related to the divested natural beverage and grains businesses, partially offset by the favorable volume mix. In International and Away From Home, net sales increased 9%.
Excluding unfavorable foreign currency exchange and non-comparable net sales in the prior year related to the divested natural beverage and grains businesses, net sales increased 12%. The comparable net sales increase was driven by higher net price realization of 15%, primarily driven by increases for coffee products and baking mixes and ingredients, partially offset by a decreased contribution from volume mix of 3 percentage points.
The Away From Home business net sales increased 17% on a comparable basis, driven by Double-Digit growth for Uncrustable sandwiches and coffee. Net sales for the international operating segment increased 6% on a comparable basis. International and Away From Home segment profit increased 10%, primarily reflecting a favorable net impact of higher net price realization and increased commodity costs.
1/3-1/4 free cash flow was $443 million, compared to $322 million in the prior year, reflecting an increase in cash provided by operating activities, partially offset by an increase in capital expenditures. Capital expenditures for the 1/4 were $142 million, representing 6.4% of net sales.
We paid down $303 million of debt during the 1/4, resulting in a total debt balance of $4.3 billion. Based on our trailing 12-month EBITDA of approximately $1.5 billion, our leverage ratio stands at 2.8 times. Let me now provide additional color on our revised outlook for fiscal 2023.
Ongoing cost inflation, volatility in supply chains, and the overall macroeconomic environment continue to impact financial results and cause uncertainty and risk for the fiscal year 2023 outlook. Any manufacturing or supply chain disruption, as well as changes in consumer purchasing behavior, including the potential impact to volume due to recent price increases, retailer inventory levels, and broader macroeconomic conditions, could materially impact actual results.
In particular, the Jif Peanut Butter product recall will impact our financial results for the full fiscal year. We continue to focus on managing the elements we can control, including taking the necessary steps to minimize the impact of cost inflation, the product recall, and any potential business disruption. As always, we will continue to plan for unforeseen volatility while ensuring we have contingency plans in place. This guidance reflects performance expectations based on our current understanding of the overall environment.
We continue to anticipate full-year net sales growth of approximately 6% compared to the prior year. Excluding prior year net sales of the divested businesses, net sales are anticipated to increase approximately 8% on a comparable basis. This growth reflects higher net pricing actions, primarily to recover increased commodity ingredient, transportation, and packaging costs. Net sales growth reflects increased volume mix for Uncrustables sandwiches and continued momentum in Away From Home channels.
These tailwinds are being partially offset by the anticipated volume mix impact of price elasticity of demand and an estimated 2% unfavorable impact from the Jif Peanut Butter product recall related to manufacturing downtime and customer returns and fees. We continue to anticipate full-year adjusted gross profit margin of approximately 33.5%, which reflects continued sequential improvement in the fourth 1/4.
We continue to project SD&A expenses to increase by approximately 9%, primarily reflecting increased compensation, along with approximately $30 million of pre-production expenses primarily related to the Uncrustable sandwich capacity expansion and higher marketing spend.
Total marketing expenses remain unchanged at approximately 5.5% of net sales, demonstrating our commitment to invest in our brands. We anticipate net interest expense of approximately $160 million and an adjusted effective income tax rate of 24.2%, along with full-year weighted average shares outstanding of approximately 106.9 million.
Taking all these factors into considerations, we are raising our anticipated full-year adjusted earnings per share to be in the range of $8.55 to $8.75, reflecting a $0.10 increase at the midpoint of the guidance range as compared to our previous expectations. The earnings outlook includes an estimated $0.80 unfavorable impact to adjusted earnings per share related to the Jif Peanut Butter product recall, inclusive of the estimated impact of manufacturing downtime, customer returns and fees, and unsalable inventory, partially offset by insurance proceeds.
This estimate has not changed since our last guidance communication. Free cash flow for the fiscal year 2023 is anticipated to be $550 million, reflecting capital expenditures of $550 million. Other key assumptions affecting cash flow remain unchanged.
Finally, we do not expect the anticipated pet divestiture to have a material impact on our fiscal year 2023 full year net sales and adjusted earnings per share results, as the transaction is anticipated to close in the late fourth 1/4 of the current fiscal year. We are pleased with our third quarter results, which show the strength of our brands and the continued momentum of the businesses.
We are taking the right actions to support continued operational excellence, and our commitment to financial discipline and a balanced approach to capital deployment supports our Long-Term growth strategy. I am confident that we are firmly on the path to deliver consistent, long-term, sustainable growth and increasing shareholder value. In closing, I would like to express my appreciation for our talented employees.
They have demonstrated their commitment to executing with excellence, and their passion for our company positions us for continued success. Thank you.