SEABOARD CORP /DE/ [SEB] Filings

10-Q 1 seb-20240928x10q.htm SEABOARD CORPORATION 10-Q DATED SEPTEMBER 28, 2024

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________________________ to ____________________________________

Commission File Number: 1-3390

Seaboard Corporation

(Exact name of registrant as specified in its charter)


Delaware		04-2260388
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

9000 West 67th Street, Merriam, Kansas		66202
(Address of principal executive offices)		(Zip Code)

(913) 676-8928

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock $1.00 Par Value	SEB	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ⌧	Accelerated Filer ◻
Non-Accelerated Filer ◻	Smaller Reporting Company ☐
	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧.

There were 971,055 shares of common stock, $1.00 par value per share, outstanding on October 22, 2024.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 28,		September 30,		September 28,		September 30,
(Millions of dollars except share and per share amounts)	2024		2023		2024		2023
Net sales:
Products (includes sales to affiliates of $278, $291, $892 and $839)	$	1,805	$	1,966	$	5,399	$	5,907
Services (includes sales to affiliates of $9, $7, $28 and $19)		344		349		1,042		1,185
Other		69		73		177		188
Total net sales		2,218		2,388		6,618		7,280
Cost of sales and operating expenses:
Products		1,731		1,905		5,251		5,981
Services		305		276		891		882
Other		45		42		123		122
Total cost of sales and operating expenses		2,081		2,223		6,265		6,985
Gross income		137		165		353		295
Selling, general and administrative expenses		105		98		311		295
Operating income		32		67		42		—
Other income (expense):
Interest expense		(21)		(9)		(50)		(41)
Interest income (includes $1, $1, $2 and $4 from affiliates)		16		18		52		45
Income from affiliates		17		23		59		74
Other investment income (loss), net		6		(7)		29		43
Foreign currency gains (losses), net		(9)		—		(21)		3
Miscellaneous, net		—		1		(1)		4
Total other income, net		9		26		68		128
Earnings before income taxes		41		93		110		128
Income tax benefit (expense)		(190)		33		(176)		34
Net earnings (loss)	$	(149)	$	126	$	(66)	$	162
Less: Net earnings attributable to noncontrolling interests		—		—		—		—
Net earnings (loss) attributable to Seaboard	$	(149)	$	126	$	(66)	$	162

Earnings (loss) per common share	$	(153.44)	$	108.55	$	(67.97)	$	139.56
Average number of shares outstanding		971,055		1,160,779		971,055		1,160,779

Other comprehensive income (loss), net of income tax expense:
Foreign currency translation adjustment		3		(3)		1		10
Unrecognized pension cost		1		—		3		4
Other comprehensive income (loss), net of tax	$	4	$	(3)	$	4	$	14
Comprehensive income (loss)		(145)		123		(62)		176
Less: Comprehensive income attributable to noncontrolling interests		—		—		—		—
Comprehensive income (loss) attributable to Seaboard	$	(145)	$	123	$	(62)	$	176

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)


	September 28,		December 31,
(Millions of dollars except share and per share amounts)	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	106	$	56
Short-term investments		1,096		973
Receivables:
Trade		585		500
Due from affiliates		88		127
Other (includes $5 and $0 due from affiliates)		177		152
Total receivables		850		779
Allowance for credit losses		(31)		(30)
Receivables, net		819		749
Inventories		1,356		1,462
Other current assets		136		123
Total current assets		3,513		3,363
Property, plant and equipment, net of accumulated depreciation of $2,098 and $1,956		2,522		2,410
Operating lease right-of-use assets, net		372		394
Investments in and advances to affiliates		725		731
Goodwill		161		160
Deferred tax assets		32		199
Other non-current assets		209		309
Total assets	$	7,534	$	7,566
Liabilities and Stockholders’ Equity
Current liabilities:
Lines of credit	$	427	$	255
Accounts payable (includes $31 and $1 due to affiliates)		361		400
Deferred revenue (includes $13 and $28 due to affiliates)		63		66
Operating lease liabilities		125		117
Other current liabilities		461		497
Total current liabilities		1,437		1,335
Long-term debt, less current maturities		992		997
Long-term operating lease liabilities		273		304
Other non-current liabilities		266		296
Total liabilities		2,968		2,932
Commitments and contingent liabilities
Stockholders’ equity:
Common stock of $1 par value. Authorized 1,250,000 shares; issued and outstanding 971,055 shares in 2024 and 2023		1		1
Accumulated other comprehensive loss		(406)		(410)
Retained earnings		4,953		5,025
Total Seaboard stockholders’ equity		4,548		4,616
Noncontrolling interests		18		18
Total equity		4,566		4,634
Total liabilities and stockholders’ equity	$	7,534	$	7,566

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


			Accumulated
			Other
	Common		Comprehensive		Retained		Noncontrolling
(Millions of dollars)	Stock		Loss		Earnings		Interests		Total
Balances, December 31, 2022	$	1	$	(422)	$	5,417	$	18	$	5,014
Comprehensive loss:
Net loss		—		—		(16)		—		(16)
Other comprehensive income, net of tax		—		14		—		—		14
Dividends on common stock ($2.25/share)		—		—		(3)		—		(3)
Balances, April 1, 2023	$	1	$	(408)	$	5,398	$	18	$	5,009
Comprehensive income:
Net earnings		—		—		52		—		52
Other comprehensive income, net of tax		—		3		—		—		3
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, July 1, 2023	$	1	$	(405)	$	5,448	$	18	$	5,062
Comprehensive income:
Net earnings		—		—		126		—		126
Other comprehensive loss, net of tax		—		(3)		—		—		(3)
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, September 30, 2023	$	1	$	(408)	$	5,572	$	18	$	5,183

Balances, December 31, 2023	$	1	$	(410)	$	5,025	$	18	$	4,634
Comprehensive income:
Net earnings		—		—		22		—		22
Other comprehensive income, net of tax		—		—		—		—		—
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, March 30, 2024	$	1	$	(410)	$	5,045	$	18	$	4,654
Comprehensive income:
Net earnings		—		—		61		—		61
Other comprehensive income, net of tax		—		—		—		—		—
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, June 29, 2024	$	1	$	(410)	$	5,104	$	18	$	4,713
Comprehensive loss:
Net loss		—		—		(149)		—		(149)
Other comprehensive income, net of tax		—		4		—		—		4
Dividends on common stock ($2.25/share)		—		—		(2)		—		(2)
Balances, September 28, 2024	$	1	$	(406)	$	4,953	$	18	$	4,566

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
	September 28,		September 30,
(Millions of dollars)	2024		2023
Cash flows from operating activities:
Net earnings (loss)	$	(66)	$	162
Adjustments to reconcile net earnings (loss) to cash from operating activities:
Depreciation and amortization		215		214
Deferred income taxes		164		(87)
Income from affiliates		(59)		(74)
Dividends received from affiliates		51		88
Other investment income, net		(29)		(43)
Payment of contingent consideration liability in excess of acquisition date fair value		—		(16)
Other, net		3		18
Changes in assets and liabilities, net of acquisitions:
Receivables, net of allowance for credit losses		(67)		200
Inventories		110		158
Other assets		(10)		8
Accounts payable		(74)		(63)
Other liabilities, exclusive of debt		(19)		16
Net cash from operating activities		219		581
Cash flows from investing activities:
Purchase of short-term investments		(1,030)		(1,712)
Proceeds from the sale of short-term investments		1,048		1,671
Proceeds from the maturity of short-term investments		14		59
Capital expenditures		(373)		(344)
Proceeds from the sale of property, plant and equipment		23		28
Proceeds from the sale of non-consolidated affiliates		13		—
Investment in and advances to affiliates, net		—		(11)
Purchase of long-term investments		(6)		(11)
Other, net		(10)		(2)
Net cash from investing activities		(321)		(322)
Cash flows from financing activities:
Uncommitted lines of credit, net		103		(155)
Draws under committed lines of credit		998		819
Repayments of committed lines of credit		(928)		(950)
Proceeds from payable to affiliate		29		—
Principal payments of long-term debt		(5)		(6)
Finance lease payments		(38)		(43)
Payment of contingent consideration		—		(14)
Dividends paid		(6)		(7)
Other, net		(1)		—
Net cash from financing activities		152		(356)
Effect of exchange rate changes on cash and cash equivalents		—		(2)
Net change in cash and cash equivalents		50		(99)
Cash and cash equivalents at beginning of year		56		199
Cash and cash equivalents at end of period	$	106	$	100

See accompanying notes to condensed consolidated financial statements.

SEABOARD CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 – Basis of Presentation and Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements of Seaboard Corporation and its subsidiaries (“Seaboard”) have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include certain information and disclosures required for comprehensive financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in Seaboard’s annual report on Form 10-K for the year ended December 31, 2023. The unaudited financial information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented. Seaboard’s first three quarterly periods include approximately 13 weekly periods ending on the Saturday closest to the end of March, June and September. Results of operations and cash flows for the periods presented are not necessarily indicative of results to be expected for the full year.

Related-Party Transactions

Seaboard has investments in non-consolidated affiliates to further its business strategies and partner with other entities that have expertise in certain industries and countries. These investments are all accounted for using the equity method of accounting. As Seaboard conducts its agricultural commodity trading business with third parties, consolidated subsidiaries and non-consolidated affiliates on an interrelated basis, cost of sales on affiliate sales transactions cannot be distinguished without making numerous assumptions, primarily with respect to mark-to-market accounting for commodity derivatives. Purchases of raw materials or services from related parties included in cost of sales were $16 million and $22 million for the three months ended September 28, 2024 and September 30, 2023, respectively, and $48 million and $66 million for the nine months ended September 28, 2024 and September 30, 2023, respectively. During the second quarter of 2024, the Commodity Trading and Milling (“CT&M”) segment received $29 million on behalf of an affiliate. The amount is included in accounts payable and is payable upon demand.

Supplemental Cash Flow Information

Non-cash activities for the nine months ended September 28, 2024 and September 30, 2023, included capital expenditures of $12 million and less than $1 million, respectively, that were in accounts payable. The following table includes supplemental cash and non-cash information related to leases. Seaboard reports the amortization of right-of-use (“ROU”) assets and changes in operating lease liabilities in other liabilities, exclusive of debt in the condensed consolidated statements of cash flows.



	Nine Months Ended
	September 28,		September 30,
(Millions of dollars)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	137	$	145
Operating cash flows from finance leases		4		5
Financing cash flows from finance leases		38		43
ROU assets obtained in exchange for new lease liabilities:
Operating leases	$	94	$	48
Finance leases		1		5

Goodwill and Other Intangible Assets

The change in the carrying amount of goodwill was related to foreign currency translation of $1 million within the CT&M segment. As of September 28, 2024, intangible assets, included in other non-current assets, were $20 million, which consisted of the gross carrying amount of $79 million, net of accumulated amortization of $53 million and accumulated foreign currency translation of $6 million.

Recently Issued Accounting Standards and Disclosure Rules Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance that requires incremental segment disclosures on an annual and interim basis related to significant segment expenses. Seaboard will adopt this guidance in its annual report on Form 10-K for the year ended December 31, 2024 (“2024 10-K”), and interim periods

beginning on January 1, 2025. The disclosure requirements must be applied retrospectively to all prior periods presented in the financial statements. Seaboard is currently evaluating the impact this guidance will have on its related disclosures. Pursuant to discussions with Seaboard’s chief executive officer (“CEO”), the chief operating decision maker (“CODM”), significant segment expenses have been evaluated and retrospective data is being compiled for enhanced segment disclosures to be included in Seaboard’s segment footnotes in the 2024 10-K.

In December 2023, the FASB issued guidance that requires additional detailed income tax disclosures related to standardization and disaggregation of information in the rate reconciliation and income taxes paid by jurisdiction. Seaboard will adopt this guidance for the annual reporting period beginning on January 1, 2025. Seaboard is currently evaluating the impact this guidance will have on its disclosures.

In March 2024, the Securities and Exchange Commission (the “SEC”) adopted final rules to enhance and standardize climate-related disclosures in registration statements and annual reports on Form 10-K. The new rules would require climate-related disclosures related to governance, strategy, risk management, targets and goals and greenhouse gas emissions. Additionally, within the notes to the financial statements, the rules would require disclosure of financial statement effects of severe weather events and other natural conditions and other climate-related financial metrics as applicable. Certain elements of the new rules are currently scheduled to become effective for Seaboard’s annual reporting period beginning on January 1, 2025, with the remaining requirements to be phased-in effective for subsequent fiscal years beginning after December 31, 2025. On April 4, 2024, the SEC issued an order staying the effectiveness of the final rules pending completion of the judicial review of consolidated challenges to the rules by the Court of Appeals for the Eighth Circuit. Seaboard is currently evaluating the impact the rules will have on its disclosures.

Note 2 – Investments

The following is a summary of the estimated fair value of short-term investments classified as trading securities:



	September 28,		December 31,
(Millions of dollars)	2024		2023
Domestic equity securities	$	218	$	143
Foreign equity securities		108		96
Domestic debt securities		620		593
Foreign debt securities		127		120
Money market funds held in trading accounts		18		17
Other trading securities		5		4
Total trading short-term investments	$	1,096	$	973

The unrealized gain (loss) related to trading securities still held at the end of the respective reporting period was $27 million and $44 million for the three- and nine-month periods ended September 28, 2024, respectively, and ($1) million and $28 million for the three- and nine-month periods ended September 30, 2023, respectively.

Seaboard had $31 million and $18 million of short-term investments denominated in foreign currencies, primarily euros, as of September 28, 2024 and December 31, 2023, respectively.

As of September 28, 2024, Seaboard had long-term investments of $135 million in real estate and renewable energy facilities, classified in other non-current assets on the condensed consolidated balance sheet. As of December 31, 2023, Seaboard had long-term investments of $207 million which included an investment of $68 million in a business development company (“BDC”). The BDC completed an initial public offering (“IPO”) and became a publicly traded company on the NYSE during the first quarter of 2024. Seaboard’s securities in this BDC are subject to standard contractual sale restrictions associated with an IPO. These sale restrictions have phased expiration dates, with all restrictions expiring by February 2025. As of September 28, 2024, the BDC securities are included in short-term investments on the condensed consolidated balance sheet and in domestic equity securities in the table above. The reclassification of these securities from long-term investments to short-term investments was a non-cash activity on the condensed consolidated statement of cash flows.

Note 3 – Inventories

The following is a summary of inventories:



	September 28,		December 31,
(Millions of dollars)	2024		2023
At lower of FIFO cost and net realizable value (“NRV”):
Hogs and materials	$	468	$	527
Pork products and materials		73		61
Grains, oilseeds and other commodities		362		366
Biofuels and related credits		148		160
Other		105		124
Total inventories at lower of FIFO cost and NRV		1,156		1,238
Grain, flour and feed at lower of weighted average cost and NRV		200		224
Total inventories	$	1,356	$	1,462

Note 4 – Lines of Credit, Long-Term Debt, Commitments and Contingencies

Lines of Credit

As of September 28, 2024, the outstanding balances under committed and uncommitted lines of credit were $175 million and $252 million, respectively. Of the total outstanding balance as of September 28, 2024, $175 million was denominated in foreign currencies with $152 million denominated in the South African rand and the remaining in various other currencies. As of December 31, 2023, the outstanding balances under committed and uncommitted lines of credit were $105 million and $150 million, respectively. Of the total outstanding balance as of December 31, 2023, $70 million was denominated in foreign currencies, with $57 million denominated in the South African rand and the remaining in various other currencies. The weighted average interest rate for outstanding lines of credit was 7.43% and 7.34% as of September 28, 2024 and December 31, 2023, respectively.

Long-Term Debt

The following is a summary of long-term debt:



		September 28,		December 31,
(Millions of dollars)		2024		2023
Term Loan due 2033	$	968	$	973
Foreign subsidiary obligations		1		1
Other long-term debt		38		38
Total debt at face value		1,007		1,012
Current maturities and unamortized costs		(15)		(15)
Long-term debt, less current maturities and unamortized costs	$	992	$	997

The Term Loan due 2033 credit agreement provides for quarterly payments on the $975 million original principal balance, with the balance due on November 10, 2033, the maturity date. The interest rate was 6.56% and 7.08% as of September 28, 2024 and December 31, 2023, respectively. Seaboard was in compliance with all restrictive debt covenants relating to this agreement as of September 28, 2024.

Legal Proceedings

Seaboard is subject to various legal proceedings and claims that arise in the ordinary course of business and otherwise, including those matters described bel