Tyson Foods (NYSE: TSN) reported Q4 EPS of $0.83, $0.05 worse than the analyst estimate of $0.88. Revenue for the quarter came in at $10.5 billion versus the consensus estimate of $10.34 billion.

"Fiscal 2015 was an important year for Tyson Foods, because it proved that our house of brands gives us the ability to produce record sales and earnings in less than optimum conditions, all while successfully merging two large companies," said Donnie Smith, president and chief executive officer of Tyson Foods, Inc.

"We achieved adjusted sales of more than $40 billion and adjusted EPS of $3.15, generated free cash flow of more than $1.5 billion, reduced net debt by $1.7 billion, repurchased $250 million of our stock in the fourth quarter and launched Ball Park® Jerky and Hillshire® Snacking – two entirely new platforms for the company," Smith said.

"We achieved $322 million in synergies for the fiscal year, and we continue to see more synergy opportunities," he added. "We're raising our synergy estimates for fiscal 2016 to more than $500 million, and we're raising our estimate for fiscal 2017 to more than $700 million. The additional synergies will allow for more investment in innovation, new product launches and the strengthening of our brands.

"Our business model is working. The Prepared Foods segment had a very strong performance in the first full year of Tyson and Hillshire coming together. The Chicken segment had an outstanding year. Pork produced solid results. Beef experienced a tough operating environment most of fiscal 2015, but the other segments more than made up for it.

"We're expecting another record year in fiscal 2016. Our projections indicate adjusted EPS of $3.50 to $3.65, consistent with our goal of averaging at least 10% annual EPS growth over time. We plan to continue repurchasing our shares; in fact, we've already bought back $200 million of our stock so far in the first quarter of fiscal 2016.

"The team has been performing at a high level since the merger, but I still see so much potential as the power of Tyson 2.0 is just beginning to emerge."

Outlook

In fiscal 2016, we expect domestic protein production (chicken, beef, pork and turkey) to increase approximately 3% from fiscal 2015 levels. Additionally, we expect disruptions related to export bans to continue in fiscal 2016. As we proceed with the integration of Hillshire Brands, we expect to realize synergies of more than $500 million in fiscal 2016 and more than $700 million in fiscal 2017 from the acquisition as well as our profit improvement plan for our legacy Prepared Foods business. The majority of these benefits will be realized in our Prepared Foods segment. The following is a summary of the outlook for each of our segments, as well as an outlook on sales, capital expenditures, net interest expense, liquidity, share repurchases and dividends for fiscal 2016.

• Chicken – USDA data shows an increase in chicken production around 2% in fiscal 2016 compared to fiscal 2015. However, more recent data indicates a greater increase in supply which could outpace the demand. Based on current futures prices, we expect lower feed costs in fiscal 2016 compared to fiscal 2015 of approximately $100 million. Many of our sales contracts are formula based or shorter-term in nature, but there may be a lag time for price changes to take effect. For fiscal 2016, we believe our Chicken segment's operating margin should exceed 10%.
• Beef – We expect industry fed cattle supplies to be flat to slightly higher in fiscal 2016 compared to fiscal 2015. Although we generally expect adequate supplies in regions we operate our plants, there may be periods of imbalance of fed cattle supply and demand. We are adjusting our normalized range of the Beef segment to 1.5-3.0% based on our historical performance and future expectations given existing beef fundamentals, tight cattle supplies and an imbalance of processing capacity. For fiscal 2016, we believe our Beef segment's operating margin should approximate the low end of the new range.
• Pork – We expect industry hog supplies to increase around 2-3% in fiscal 2016 compared to fiscal 2015. For fiscal 2016, we believe our Pork segment's operating margin will be in its normalized range of 6-8%.
• Prepared Foods – We expect lower raw material costs of approximately $350 million in fiscal 2016. As we continue to invest heavily in innovation, new product launches and the strengthening of our brands, we believe our operating margin should be near the low-end of our expected range of 10-12% in fiscal 2016.
• Other – In the fourth quarter of fiscal 2015, we began reporting the International segment in Other following the sale of our Mexico and Brazil poultry operations in fiscal 2015. As a result, Other includes our foreign operations related to raising and processing live chickens in China and India. We expect Other adjusted operating loss should be approximately $50 million in fiscal 2016.
• Sales – We expect sales to approximate $41 billion for fiscal 2016 as we grow our current businesses to offset the impact of fiscal 2015 divestitures.
• Capital Expenditures – We expect capital expenditures to approximate $900 million for fiscal 2016.
• Net Interest Expense – We expect net interest expense will approximate $255 million for fiscal 2016.
• Liquidity – We expect total liquidity, which was $1.9 billion at October 3, 2015, to be above our goal to maintain liquidity in excess of $1.2 billion.
• Share Repurchases – In fiscal 2016, we expect to increase share repurchases under our share repurchase program. As of October 3, 2015, 21.1 million shares remain authorized for repurchases. The timing and extent to which we repurchase shares will depend upon, among other things, our working capital needs, market conditions, liquidity targets, our debt obligations and regulatory requirements. During the first quarter of fiscal 2016 as of November 20, 2015, we have repurchased approximately 4.4 million shares for $200 million, excluding shares repurchased to offset dilution from our equity compensation plans.
• Dividends – On November 19, 2015, the Board of Directors increased the quarterly dividend previously declared on July 30, 2015, to $0.15 per share on our Class A common stock and $0.135 per share on our Class B common stock. The increased quarterly dividend is payable on December 15, 2015, to shareholders of record at the close of business on December 1, 2015. The Board also declared a quarterly dividend of $0.15 per share on our Class A common stock and $0.135 per share on our Class B common stock, payable on March 15, 2016, to shareholders of record at the close of business on March 1, 2016. Beginning in fiscal 2017, we anticipate to increase our annual dividends approximately $0.10 per year.

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