A transcript of this earnings conference call will be available within 24 hours at investor.
Our strong top-line growth combined with gross margin expansion and value capture synergies, despite the impact of ongoing COVID-19 related costs, led to better than expected adjusted EBIT growth, up 18%, and a 31% increase in adjusted earnings per share to $1.02 per share.
In addition, we announced that our Board approved a 6% increase in our quarterly dividend, reflecting the Company's strong earnings performance, cash flows and increasing confidence in our long-term growth prospects as well as our continued commitment to shareholder returns.
Organic sales in the first quarter increased 8%, led by 12% organic sales growth in Meals & Beverages reflecting our continued investment in our brands to attract and retain new households as retailers also rebuilt inventory levels.
Turning to our Snacks Division, we drove solid growth, with organic sales up 4% reflecting sales increases across the majority of our nine power brands.
For the sixth consecutive quarter, our total Company in-market dollar performance grew in measured channels, increasing 7%, with growth across almost the entire portfolio.
We also continued to see elevated repeat rates with over 70% of households gained since the beginning of the pandemic purchasing our products again.
Within the Meals & Beverages division, soup net sales increased 21% with growth in all segments.
We grew our household penetration in overall soup by 1.3 points.
And, among millennials, we grew share for total US soup by nearly 1 point, including significant growth of 2.7 points on condensed and over 1 point on ready-to-serve, demonstrating the sustained relevance of our core businesses with younger consumers.
Our condensed soups were the highlight of the quarter with double-digit net sales growth, gains in share led by cooking SKUs, and 4 million new households purchasing this quarter versus prior year.
Our recipe solutions continue to resonate with consumers as we saw a 20% increase in overall recipe-related page views in the first quarter compared to the prior year.
Our Pacific Foods growth engine performed well as we continued to build scale with nearly 22% dollar consumption growth in soup and broth in the quarter.
Turning now to the performance of our Snacks power brands, which grew dollar consumption by 6% in the quarter.
The most notable being Late July, which grew consumption sales by 26% and share by nearly 2 points.
Our e-commerce in-market dollar consumption results were once again impressive, growing 85% over prior year.
For the first quarter, reported net sales increased 7% to $2.3 billion.
Organic net sales increased 8% in the quarter, which excludes the impact of the sale of the European chips business.
Adjusted EBIT increased 18% to $463 million, as higher sales volumes, improved adjusted gross margin performance and lower selling expenses were partially offset by increased marketing and slightly higher adjusted administrative expenses.
Adjusted earnings per share from continuing operations increased by 31%, or $0.24, to $1.02 per share, reflecting an increase in adjusted EBIT as well as a lower net interest expense.
Breaking down our net sales performance for the quarter, organic net sales increased 8% from the prior year.
This performance was driven by a 6 point gain in volume across the majority of our retail brands, offset partially by declines in foodservice.
Lower levels of promotional spending in both segments drove a 2 point gain.
All-in, our reported net sales were up 7% from the prior year.
Our adjusted gross margin increased by 100 basis points in the quarter to 34.8%.
Favorable product mix, which drove a 30 basis point improvement in our adjusted gross margin, was largely driven by the increased contribution from our soup products within our Meals & Beverages segment.
Separately, we are estimating a 60 basis point gross margin improvement from better operating leverage within our supply chain network as we significantly increased our overall production, primarily within Meals & Beverages.
Net pricing drove a 120 basis point improvement, due to lower levels of promotional spending in the quarter.
Inflation and other factors had a negative impact of 270 basis points driven by cost inflation, as overall input prices on a rate basis increased approximately 2%, as well as other operational costs and continued COVID-19 related costs.
This was partially offset by our ongoing supply chain productivity program, which contributed a 150 basis point improvement, and includes, among others, initiatives within procurement and logistics optimization.
Our cost savings program, which is incremental to our ongoing supply chain productivity program, added 10 basis points to our gross margin expansion.
Marketing and selling expenses increased 1% in the quarter to $208 million.
This increase was driven primarily by our planned increased investment in advertising and consumer promotion expenses, which is up 17% versus a year ago.
Adjusted administrative expenses increased $11 million or 9% to $137 million, driven by higher benefit costs and general administrative costs, including incremental consulting charges related to supply chain optimization, as well as inflation, partially offset by the benefits from our cost savings initiatives.
This quarter, we achieved $15 million in incremental year-over-year savings, inclusive of Snyder's-Lance synergies.
To-date, that brings our savings for the overall program to $740 million.
We expect an additional $60 million to $70million in the balance of fiscal 2021 and we remain on-track to deliver our cumulative savings target of $850 million by the end of fiscal 2022.
As discussed, adjusted EBIT grew by 18%.
This was largely driven by the increase in demand for our products with sales gains contributing $53 million of EBIT growth.
The overall adjusted gross margin expansion of 100 basis points contributed $23 million of EBIT growth, which more than offset higher marketing and selling expenses of $2 million reflecting our investments in A&C, partially offset by lower selling expenses.
Our adjusted EBIT margin increased year-over-year by 180 basis points to 19.8%.
Adjusted earnings per share increased $0.24 from $0.78 in the prior-year quarter to $1.02 per share.
Adjusted EBIT had a positive $0.18 impact on adjusted EPS.
Net interest expense declined year-over-year by $25 million, delivering a $0.06 positive impact to adjusted EPS, as we have used proceeds from completed divestitures and our strong cash flow to reduce debt.
The impact from the adjusted tax rate was nominal, completing the bridge to $1.02 per share.
In Meals & Beverages, organic net sales increased 12% to $1.3 billion, reflecting double-digit increases across most of our US retail products, including gains in US soups, inclusive of Pacific Foods soups and broth, Prego pasta sauces, V8 beverages, Campbell's pasta, and Pace Mexican sauces, as well as gains in Canada, partially offset by declines in foodservice.
Net sales of US soup, including Pacific, increased 21% compared to the prior year due to retailers rebuilding inventory for the upcoming soup season, in-market gains in condensed soups and broth and moderating promotional spending.
Operating earnings for Meals & Beverages increased 18% to $333 million.
Within Snacks, organic sales increased 4% driven primarily by lower levels of promotional spending as well as healthy velocity on the majority of the base business.
Operating earnings for Snacks increased 11% driven by lower selling expenses, lower marketing overhead, and sales volume gains, partly offset by higher administrative expenses.
Cash flow from operations was $180 million, comparable to the prior year as changes in working capital were basically offset by higher cash earnings and lower other cash payments.
Cash from investing activities decreased by $341 million, driven by lapping the net proceeds from our divested businesses in the prior year.
The cash outlay for capital expenditures was $74 million, $24 million lower than the prior year driven by discontinued operations, and in line with our previously communicated full-year expectation.
Cash outflows for financing activities were $245 million compared to $453 million a year ago.
Dividends paid in the amount of $108 million were comparable to the prior year, reflecting our current quarterly dividend of $0.35 per share.
We ended the quarter with cash and cash equivalents of $722 million.
Based on our expectation of a continued elevated demand landscape and increased investment in our brands, we are providing the following guidance for the second quarter of fiscal 21.
We expect year-over-year growth in net sales of 5% to 7% as growth more closely aligns with consumption reflecting better inventory, strong programming and improving share positions.
We expect the combination of healthy EBIT growth and the benefit of significantly reduced interest expense year-over-year to result in adjusted earnings per share growth of 12% to 15%, or $0.81 to $0.83 per share.

Summary:
Our strong top-line growth combined with gross margin expansion and value capture synergies, despite the impact of ongoing COVID-19 related costs, led to better than expected adjusted EBIT growth, up 18%, and a 31% increase in adjusted earnings per share to $1.02 per share.
Organic sales in the first quarter increased 8%, led by 12% organic sales growth in Meals & Beverages reflecting our continued investment in our brands to attract and retain new households as retailers also rebuilt inventory levels.
Turning now to the performance of our Snacks power brands, which grew dollar consumption by 6% in the quarter.
Organic net sales increased 8% in the quarter, which excludes the impact of the sale of the European chips business.
Adjusted earnings per share from continuing operations increased by 31%, or $0.24, to $1.02 per share, reflecting an increase in adjusted EBIT as well as a lower net interest expense.
Breaking down our net sales performance for the quarter, organic net sales increased 8% from the prior year.
We expect an additional $60 million to $70million in the balance of fiscal 2021 and we remain on-track to deliver our cumulative savings target of $850 million by the end of fiscal 2022.
Adjusted earnings per share increased $0.24 from $0.78 in the prior-year quarter to $1.02 per share.
The impact from the adjusted tax rate was nominal, completing the bridge to $1.02 per share.
We expect year-over-year growth in net sales of 5% to 7% as growth more closely aligns with consumption reflecting better inventory, strong programming and improving share positions.
We expect the combination of healthy EBIT growth and the benefit of significantly reduced interest expense year-over-year to result in adjusted earnings per share growth of 12% to 15%, or $0.81 to $0.83 per share.