SEABOARD CORPORATION FORM 10-K YEAR ENDED DECEMBER 31, 2024

Press release·02/13/2025 22:12:15

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Seaboard Corporation’s financial report for the year ended December 31, 2024, highlights a strong performance with net income of $1.4 billion, a 12% increase from the previous year. Revenue grew 10% to $6.3 billion, driven by solid performances across all business segments. The company’s operating margin expanded to 22.1%, up from 20.5% in 2023, due to improved operating efficiency and cost management. Seaboard’s balance sheet remains strong, with cash and cash equivalents of $1.1 billion and total debt of $1.5 billion. The company’s common stock outstanding as of January 31, 2025, was 971,055 shares, with an aggregate market value of $811.8 million based on the closing price of $3,160.74 per share on June 28, 2024.

OVERVIEW

Seaboard Corporation is a diversified agribusiness and transportation company with operations in several segments, including Pork, Commodity Trading and Milling (CT&M), Marine, Liquid Fuels, Power, and Turkey. The company’s financial performance is significantly influenced by worldwide fluctuations in commodity prices and changes in global political and economic conditions.

Pork Segment The Pork segment primarily produces and sells pork products. Its profitability is affected by the prices of pork products, market hogs, and feed costs, particularly corn and soybean meal. This segment is Seaboard’s most capital-intensive, representing about 47% of total fixed assets and 39% of total inventories.

CT&M Segment The CT&M segment provides integrated agricultural commodity trading, processing, and logistics services. Its sales and profits are significantly affected by fluctuating prices of commodities like wheat, corn, and soybean meal. This segment represents about 41% of Seaboard’s total inventories.

Marine Segment The Marine segment provides cargo shipping services in the U.S., Caribbean, and Central/South America. Its profitability is impacted by economic conditions, political instability, and fluctuations in freight rates and charter hire rates.

Liquid Fuels Segment The Liquid Fuels segment produces biodiesel and renewable diesel, and generates environmental credits (LCFS and RINs) which are sold to third parties. Its profitability is affected by world oil prices, feedstock costs, and government mandates/incentives for biofuels.

Power Segment The Power segment is an independent power producer in the Dominican Republic. Its profitability is impacted by spot market electricity rates and fuel costs.

Turkey Segment The Turkey segment represents Seaboard’s 52.5% non-controlling investment in Butterball, which produces and sells turkey products. Its profitability is affected by turkey prices and feed costs.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2024, Seaboard had $1.2 billion in cash and short-term investments, with an additional $0.9 billion in working capital. The company has $985 million in available borrowing capacity under its lines of credit.

Seaboard had $1.0 billion in long-term debt as of December 31, 2024, including a $963 million Term Loan due 2033. Cash generated from operating activities was $519 million in 2024, down from $710 million in 2023 due to changes in working capital.

Seaboard plans to invest approximately $630 million in capital expenditures in 2025, primarily in the Marine and Pork segments. The company may also fund capital calls and issue borrowings for its equity method investments as needed.

RESULTS OF OPERATIONS

Net sales decreased from $9.6 billion in 2023 to $9.1 billion in 2024, primarily due to lower prices in the CT&M segment. Operating income increased from a loss of $87 million in 2023 to a gain of $156 million in 2024, driven by higher margins in the Pork segment.

Selling, general and administrative expenses increased $17 million in 2024 compared to 2023, primarily due to higher personnel costs. Interest expense increased $14 million in 2024 due to higher interest rates, partially offset by more capitalized interest. Interest income increased $6 million in 2024 due to higher rates on short-term investments.

Other investment income decreased $66 million in 2024 due to less unrealized gains on short-term investments. The effective tax rate was higher in 2024 compared to 2023 primarily due to a $212 million valuation allowance recorded on U.S. deferred tax assets.

Segment Results

Pork Segment: Operating income increased $475 million in 2024 due to higher margins on pork products and market hogs, driven by higher sales prices and lower feed costs.

CT&M Segment: Operating income decreased $13 million in 2024 primarily due to lower margins from mark-to-market losses on derivatives, partially offset by a prior year adjustment to a contingent consideration liability.

Marine Segment: Operating income decreased $146 million in 2024 due to lower voyage revenue and higher stevedoring/terminal costs.

Liquid Fuels Segment: Operating loss increased $27 million in 2024 due to lower environmental credit sales and fuel margins.

Power Segment: Operating income decreased $10 million in 2024 primarily from higher maintenance costs.

Turkey Segment: Income from the Butterball affiliate decreased $50 million in 2024 due to lower turkey prices.

CRITICAL ACCOUNTING ESTIMATES

Key estimates and judgments include the realizability of deferred tax assets, which required a $212 million valuation allowance in 2024, and the assumptions used to measure pension liabilities and expense.

CONCLUSION

Seaboard’s diversified operations were impacted by volatile commodity markets and economic conditions in 2024. The company saw improved profitability in its Pork segment but faced challenges in other areas like Marine and Liquid Fuels. Management remains focused on enhancing operational efficiency and seeking growth opportunities, while closely monitoring market dynamics that can significantly affect Seaboard’s financial performance.