Tyson Foods, Inc. (NYSE:TSN) Q1 2016 Earnings Conference Call - Final Transcript
Feb 05, 2016 • 09:00 am ET
to calendar 2016, as well as cash held for the retirement of $638 million in notes coming due in the second quarter. When these notes are retired, we will have paid down $2.4 billion of gross debt since the acquisition of Hillshire in August 2014. Our rapid leverage reduction in only 19 months reflects our commitment to maintaining investment grade credit metrics. Net interest expense was $65 million during Q1. For the quarter, our diluted shares outstanding were 400 million.
Now here are some additional thoughts on fiscal 2016. We now expect revenues of approximately $37 billion, which includes the impact of fiscal 2015 divestitures and expected declines in beef, pork, and feed prices. We expect to capture more than $500 million of synergies in fiscal 2016, which includes more than $200 million of incremental synergies over fiscal 2015 from our prepared foods, profit improvement initiatives in Hillshire brand synergies. Net interest expense should approximate $245 million. We currently estimate our effective tax rate to be around 35%. CapEx is expected to be $900 million, as we continue to focus on projects that will create long-term shareholder value.
Prior to adjusting for any additional share repurchases subsequent to this call and based on our average share price in Q1, we expect our diluted shares to be around 394 million. As we have demonstrated, our capital allocation priorities are governed by our disciplined focus on driving long-term shareholder value. Our priorities for deploying these significant cash flows that our operations generate are for growing our businesses organically through operational efficiency in capital expansion projects, along with investing in innovation and brand building.
Acquiring businesses that support our strategic objectives and returning cash to shareholders through share repurchases and dividends all while maintaining plenty of liquidity, investment grade ratings and continuing to expand our debt capacity.
In closing, our Q2 should beat last year, but will be less than Q1 due to our typical seasonality. And the third and fourth quarters are expected to be strong. As mentioned in this morning's release, we are raising our EPS guidance range to $3.85 to $3.95 for fiscal 2016, up from $3.50 to $3.65. This represents a four-year EPS compounded annual growth rate of more than 18% annually. With each of our segments demonstrating tremendous overall performance, we view Q1 not as an exception, but as a new foundation, which provides momentum for our continued growth.
This concludes our prepared remarks. Operator, we're ready to begin Q&A.
Operator, we are ready for the first question.