sauce growth were offset by inflation, as well as investments to support new product launches including Rao’s frozen pizza.
Total operating expenses of $64.5 million increased 26.1% year-over-year, driven in part by $10.8 million of one-time expenses related to the pending merger with Campbell’s. Adjusted operating expenses3 of $40.3 million increased 12.6% versus the prior year period, reflecting higher volume-driven selling expense, continued investments in talent and a 10.3% year-over-year increase in combined marketing and R&D investments.
Net interest expense was $8.6 million compared to $6.7 million in the prior year period due to higher interest rates.
Net income was $1.4 million, 0.6% of net sales, or $0.01 per diluted share. This compared to net income of $1.5 million, or $0.01 per diluted share in the prior year period. Adjusted net income3 was $20.6 million, or $0.20 per diluted share, as compared to adjusted net income of $14.3 million or $0.14 per diluted share in the prior year period.
Adjusted EBITDA3 of $39.0 million increased 32.2% versus the prior year period, benefitting from 22.8% growth for adjusted gross profit and adjusted operating expense leverage while reinvesting meaningfully into marketing and R&D. Adjusted EBITDA margin3 was 15.1%, up 100-basis points versus the prior year period.
Balance Sheet and Cash Flow Highlights
As of September 30, 2023, cash and cash equivalents were $202.5 million and total debt was $483.8 million, resulting in a net debt to last twelve months adjusted EBITDA3 ratio of 1.9x.
Cash from operating activities was $71.0 million in the 39-week period ended September 30, 2023, a $44.2 million increase as compared to the prior year period. Higher cash flow was driven by improved profitability and working capital. Year-to-date capital expenditures were $7.1 million.
Fiscal 2023 Outlook
Due to the pending merger with Campbell’s, Sovos Brands will not be providing forward looking guidance.
Footnotes:
(1) Organic net sales and organic net sales growth are defined as reported net sales or reported net sales growth excluding, when they occur, the impact of a 53rd week of shipments, acquisitions and divestitures. For discussions of fiscal 2023 results and guidance, organic net sales growth excludes the impact of the Birch Benders divestiture and the 53rd week in the prior year.
(2) Source: Market performance refers to dollar sales and unit growth rates as reported by Circana MULO in the 13-week period ended October 1, 2023. Household penetration refers to data reported by Circana All Outlet for the 52-week period ended October 1, 2023.
(3) Adjusted gross profit, adjusted gross margin, adjusted operating expense, adjusted operating income, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted diluted EPS are non-