SEABOARD CORP DE

Previous wording

Sales and costs of Seaboard’s segments are significantly influenced by worldwide fluctuations of commodity prices and changes in global political and economic conditions. Accordingly, sales, operating income and cash flows can fluctuate significantly from year to year. As each segment operates in a distinct industry and a different geographic location, management evaluates their operations separately. Seaboard’s reporting segments are based on information used by Seaboard’s CEO in his capacity as chief operating decision maker to determine allocation of resources and assess performance.

Current wording

Sales and costs of Seaboard’s segments are significantly influenced by worldwide fluctuations of commodity prices and changes in global political and economic conditions. Accordingly, sales, operating income and cash flows can fluctuate significantly from year to year. As each segment operates in a distinct industry and varying geographic locations, management independently evaluates each segment’s operations. Seaboard’s reporting segments are based on information used by Seaboard’s CEO, in his capacity as chief operating decision maker, to determine allocation of resources and assess performance. During 2024, Liquid Fuels became a separate reportable segment, and the former Sugar and Alcohol segment became part of All Other. The historical periods presented have been recast to reflect these changes. See Note 13 to the consolidated financial statements for further discussion of this segment change.

Previous wording

The Pork segment primarily produces hogs to process and sells pork products throughout the U.S. and to foreign markets. Sales prices are directly affected by both domestic and worldwide supply and demand for pork products and other proteins. Feed accounts for the largest input cost in raising hogs and is materially affected by price changes for corn and soybean meal. Market prices for hogs purchased from third parties for processing at the plant also represent a major cost factor. As a result, commodity price fluctuations can affect profitability and cash flows. This segment is Seaboard’s most capital-intensive segment, representing approximately 63% of Seaboard’s total fixed assets and approximately 52% of total inventories as of December 31, 2023. With the plant generally operating near capacity, Seaboard is continually looking for ways to enhance the plant’s operational efficiency, while also looking to increase margins by introducing new, higher margin value-added products. This segment produces biodiesel and renewable diesel and related credits for sale to third parties. Sales prices are affected by the supply and demand of diesel and environmental credit initiatives. This segment also produces renewable natural gas, but Seaboard does not expect its sales to be significant in 2024 as just a few sites are operational and production is dependent upon maturity of the lagoons.

Current wording

The Pork segment primarily produces hogs to process and sells pork products throughout the U.S. and to foreign markets. Sales prices are directly affected by both domestic and worldwide supply and demand for pork products and other proteins. Feed accounts for the largest input cost of raising hogs and is materially affected by price changes for corn and soybean meal. Market prices for hogs purchased from third parties for processing at the plant also represent a significant cost factor. As a result, commodity price fluctuations can affect profitability and cash flows. This segment is Seaboard’s most capital-intensive segment, representing approximately 47% of Seaboard’s total fixed assets and approximately 39% of total inventories as of December 31, 2024. With the plant generally operating near capacity, Seaboard is continually looking for ways to enhance the plant’s operational efficiency, while also looking to increase margins by introducing new, higher margin value-added products. This segment also produces swine-derived renewable natural gas, butsales are not significant as most sites are in the early stages of operation. Consistent production at each site may take longer than expected as it is dependent upon a number of variables, including the maturity and volatile solid concentration of the lagoon, weather, hog health and methanogen health.

Previous wording

The CT&M segment provides integrated agricultural commodity trading, processing and logistics services. The majority of its sales are derived from sourcing agricultural commodities from multiple origins and delivering them to third-party and affiliate customers in various international locations. This segment’s sales are significantly affected by fluctuating prices of various commodities, such as wheat, corn and soybean meal. Exports from various countries can exacerbate volatile market conditions. Profit margins are sometimes protected through commodity derivatives and other risk management practices, but the execution of these purchase and delivery transactions has long cycles of completion, which may extend for several months with a high degree of price volatility. As a result, these factors can significantly affect sales volumes, operating income, working capital and related cash flows from period to period. This segment represents approximately 41% of Seaboard’s total inventories as of December 31, 2023. Consolidated subsidiaries and non-consolidated affiliates operate the grain processing facilities in foreign countries that are, in most cases, lesser developed and can be significantly impacted by changes in local crop production, political instability and local government policies, as well as fluctuations in economic and industry conditions and foreign currency exchange rates.

Current wording

The CT&M segment provides integrated agricultural commodity trading, processing and logistics services. The majority of its sales are derived from sourcing agricultural commodities from multiple origins and delivering them to third-party and affiliate customers in various international locations. This segment’s sales are significantly affected by fluctuating prices of various commodities, such as wheat, corn and soybean meal. Exports from various countries can exacerbate volatile market conditions. Profit margins are sometimes protected through commodity derivatives and other risk management practices, but the execution of these purchase and delivery transactions have long cycles of completion, which may extend for several months with a high degree of price volatility. As a result, these factors can significantly affect sales volumes, operating income, working capital and related cash flows from period to period. This segment represents approximately 41% of Seaboard’s total inventories as of December 31, 2024. Consolidated subsidiaries and non-consolidated affiliates operate the grain processing facilities in foreign countries that are, in most cases, lesser developed and are more likely to be significantly impacted by changes in local crop production, political instability and local government policies, as well as fluctuations in economic and industry conditions and foreign currency exchange rates.

Previous wording

The Marine segment provides cargo shipping services in the U.S., the Caribbean and Central and South America. Fluctuations in economic conditions and political instability in the regions or countries in which this segment operates may affect trade volumes and operating profits. In addition, freight rates can fluctuate depending on regional supply and demand for shipping services. Since this segment time-charters ocean cargo vessels, it is affected by fluctuations in charter hire rates as well as fuel costs.

Current wording

The Marine segment provides cargo shipping services in the U.S., the Caribbean and Central and South America. Fluctuations in economic conditions and political instability in the regions or countries in which this segment operates may affect trade volumes and operating profits. In addition, freight rates can fluctuate depending on regional supply and demand for shipping services. Since this segment time-charters ocean cargo vessels, it is affected by fluctuations in charter hire rates.

Previous wording

The Turkey segment, accounted for using the equity method, produces turkeys to process and sells turkey products. Sales prices are directly affected by both domestic and worldwide supply and demand for turkey products and other proteins. Feed accounts for the largest input cost in raising turkeys and is materially affected by price changes for corn and soybean meal. As a result, commodity price fluctuations can affect profitability and cash flows.

Current wording

The Turkey segment represents Seaboard’s 52.5% non-controlling investment in Butterball, which is accounted for using the equity method. Butterball produces turkeys to process and sells turkey products. Sales prices are directly affected by both domestic and worldwide supply and demand for turkey products and other proteins. Feed accounts for the largest input cost of raising turkeys and is materially affected by price changes for corn and soybean meal. As a result, price fluctuations for corn and soybean meal affect profitability and cash flows.

Previous wording

As of December 31, 2023, $49 million of the $1.0 billion of cash and short-term investments were held by Seaboard’s foreign subsidiaries. Historically, Seaboard has considered substantially all foreign profits as being permanently invested in its foreign operations, including all cash and short-term investments held by foreign subsidiaries. During 2022, Seaboard reversed its indefinite reinvestment assertion in connection with certain previously-taxed undistributed earnings of its Seaboard Marine subsidiary due to the tax effectiveness of repatriating these earnings and recorded a deferred tax liability for federal and state incremental tax costs associated with the repatriation. For all other foreign subsidiaries, Seaboard intends to continue permanently reinvesting their funds outside the U.S. as they continue to demonstrate no need to repatriate them to fund Seaboard’s U.S. operations for the foreseeable future. Seaboard has not recorded deferred taxes for state or foreign withholding taxes that would result upon repatriation of these funds to the U.S. because determination of the tax that might be paid on unremitted earnings if eventually remitted is not practical due to the complexity of the multi-jurisdictional tax environment in which Seaboard operates.

Current wording

As of December 31, 2024, Seaboard had cash and short-term investments of nearly $1.2 billion and additional total working capital of $0.9 billion. As of December 31, 2024, $97 million of the $1.2 billion of cash and short-term investments were held by Seaboard’s foreign subsidiaries. Historically, Seaboard has considered substantially all foreign profits as being permanently invested in its foreign operations, including all cash and short-term investments held by foreign subsidiaries. During 2022, Seaboard reversed its indefinite reinvestment assertion in connection with certain previously-taxed undistributed earnings of its Seaboard Marine subsidiary due to the tax effectiveness of repatriating. For all other foreign subsidiaries, Seaboard intends to continue permanently reinvesting their funds outside the U.S. as they continue to demonstrate no need to repatriate them to fund Seaboard’s U.S. operations for the foreseeable future. Seaboard has not recorded deferred taxes for state or foreign withholding taxes that would result upon repatriation of these funds to the U.S. because determination of the tax that might be paid on unremitted earnings if eventually remitted is not practical due to the complexity of the multi-jurisdictional tax environment in which Seaboard operates.

Previous wording

Liquidity includes cash and cash equivalents, short-term investments and available borrowing capacity under line of credit facilities. As of December 31, 2023, Seaboard had cash and short-term investments of nearly $1.0 billion and additional total working capital of $1.0 billion. The following table presents a summary of Seaboard’s available borrowing capacity under lines of credit.

Current wording

The following table presents a summary of Seaboard’s available borrowing capacity under lines of credit.

Previous wording

During 2023, Seaboard invested $506 million in property, plant and equipment, of which $361 million was in the Pork segment and $121 million was in the Marine segment. The Pork segment expenditures were primarily to fund renewable biogas recovery projects and maintenance and investment of the renewable diesel plant. At certain hog farms, the Pork segment is constructing renewable biogas recovery facilities to capture methane from its hog lagoons and inject it as renewable natural gas into the local pipeline infrastructure. The Marine segment expenditures primarily related to the purchase of a used vessel, deposits and installment payments on dual-fuel vessels under construction and the funding of other investments.

Current wording

Cash used in investing activities was $484 million for the year ended December 31, 2024, compared to $273 million for 2023. During 2024, Seaboard invested $511 million in property, plant and equipment, of which $299 million was in the Pork segment and $172 million was in the Marine segment. The Pork segment expenditures were primarily to fund renewable biogas recovery projects. At certain hog farms, the Pork segment has renewable biogas recovery facilities to capture methane from its hog lagoons and convert it into renewable natural gas, which is then injected into the local pipeline infrastructure. Some of these sites were placed in service during 2024, while one remains under construction. The Marine segment expenditures primarily related to installment payments on dual-fueled vessels under construction and the funding of other investments. Two vessels were completed and delivered in 2024, and six other dual-fueled vessels are expected to be completed and delivered in 2025. Cash flows from investing activities for short-term investments are part of Seaboard’s overall liquidity management strategy. Short-term investment purchases are a result of the investment of excess cash, asset allocation from the active management of the portfolio and reinvestment of matured securities.

Previous wording

Seaboard continues to make long-term investments with $16 million, $117 million and $98 million invested during the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, Seaboard is committed to invest approximately $11 million in certain long-term investments in 2024, primarily real-estate related. Seaboard may also fund capital calls and issue borrowings for its equity method investments based on specific facts and circumstances.

Current wording

Also, as of December 31, 2024, Seaboard committed to invest approximately $35 million in certain long-term investments in 2025, primarily real estate-related. Based on specific facts and circumstances, Seaboard may also fund capital calls and issue borrowings for its equity method investments.

Previous wording

Seaboard acquired businesses in 2022 and 2021 and intends to continue to look for opportunities to further grow and diversify its operations, but there are no definitive plans for additional acquisitions at this time. Management intends to utilize existing liquidity, available borrowing capacity and other financing alternatives to fund these opportunities. The terms and availability of such financing may be impacted by economic and financial market conditions, as well as Seaboard's financial condition and results of operations at the time Seaboard seeks such financing, and there can be no assurances that Seaboard will be able to obtain such financing on terms that will be acceptable or advantageous.

Current wording

Seaboard continues to look for opportunities to further grow and diversify its operations, but there are no definitive plans for additional acquisitions at this time. Management intends to utilize existing liquidity, available borrowing capacity and other financing alternatives to fund these opportunities. The terms and availability of such financing may be impacted by economic and financial market conditions, as well as Seaboard’s financial condition and results of operations at the time Seaboard seeks such financing, and there can be no assurances that Seaboard will be able to obtain such financing on terms that will be acceptable or advantageous.

Previous wording

Other than those obligations discussed above, future obligations mostly include normal operating expenses. For operating and finance leases, Seaboard had a current undiscounted obligation of $192 million and a long-term undiscounted obligation of $492 million as of December 31, 2023, see Note 5 to the consolidated financial statements. The majority of Seaboard’s purchase commitments for materials or supplies are related to hog, grain, feedstock and fuel procurement contracts with a current obligation of approximately $1.5 billion and a long-term obligation of approximately $800 million as of December 31, 2023, see Note 8 to the consolidated financial statements. Also, Seaboard is subject to obligations

Current wording

discussion on leases. The majority of Seaboard’s purchase commitments for materials or supplies are related to hog, grain, freight and fuel procurement contracts with a current obligation of approximately $1.3 billion and a long-term obligation of approximately $576 million as of December 31, 2024; see Note 8 to the consolidated financial statements for further discussion on commitments. Also, Seaboard is subject to obligations under its existing defined benefit pension plans. As of December 31, 2024, the unfunded status of all plans was $24 million. For additional information about Seaboard’s pension plans, see Note 9 to the consolidated financial statements.

Previous wording

Net sales for the years ended December 31, 2023, 2022 and 2021 were $9.6 billion, $11.2 billion and $9.2 billion, respectively. The decrease of $1.6 billion for 2023 compared to 2022 primarily reflected a sales decline of $1.2 billion in the CT&M segment due to lower prices and volumes of commodities sold and a sales decline of $544 million in the Marine segment due to lower cargo volumes and freight rates. The increase in net sales of $2 billion for 2022 compared to 2021 primarily reflected higher prices of commodities sold in the CT&M segment of $1.1 billion, and higher freight rates in the Marine segment of $647 million. See the net sales discussion by reportable segment below for more details.

Current wording

Net sales for the years ended December 31, 2024, 2023 and 2022 were $9.1 billion, $9.6 billion and $11.2 billion, respectively. The decrease in sales of $500 million for 2024 compared to 2023 primarily reflected a $422 million decrease in CT&M segment sales due to lower prices of commodities. The decrease of $1.6 billion for 2023 compared to 2022 primarily reflected a sales decline of $1.2 billion in the CT&M segment due to lower prices and volumes of commodities sold and a sales decline of $544 million in the Marine segment due to lower cargo volumes and freight rates. See the net sales discussion by reportable segment below for more details.

Previous wording

Operating income (loss) for the years ended December 31, 2023, 2022 and 2021 was ($87) million, $657 million and $458 million, respectively. The decrease of $744 million for 2023 compared to 2022 primarily reflected a decline in operating income of $392 million in the Pork segment due to lower margins on the sale of pork products and market hogs, and a decline in operating income of $363 million in the Marine segment due to lower voyage revenue. The increase in operating income of $199 million for 2022 compared to 2021 primarily reflected an increase of $394 million in the Marine segment due to higher voyage revenue, an increase of $90 million in the CT&M segment due to higher margins on certain commodities, partially offset by lower margins on pork product, market hog and biodiesel sales in the Pork segment which decreased operating income by $323 million. See the operating income discussion by reportable segment below for more details.

Current wording

Operating income (loss) for the years ended December 31, 2024, 2023 and 2022 was $156 million, ($87) million and $657 million, respectively. The increase in operating income of $243 million for 2024 compared to 2023 primarily reflected an increase in operating income of $475 million in the Pork segment due to higher margins on the sale of pork products and market hogs, partially offset primarily by a decrease in operating income of $146 million in the Marine segment due to lower voyage revenue. The decrease of $744 million for 2023 compared to 2022 primarily reflected a decrease in operating income of $395 million in the Pork segment due to lower margins on the sale of pork products and market hogs and a decline in operating income of $363 million in the Marine segment due to lower voyage revenue. See the operating income discussion by reportable segment below for more details.

Previous wording

Selling, general and administrative (“SG&A”) expenses increased $30 million for the year ended December 31, 2023 compared to 2022. The increase was primarily due to higher personnel costs including $7 million for the deferred compensation program and an adjustment of the contingent consideration liability discussed above of $10 million. SG&A expenses for the year ended December 31, 2022 increased $13 million compared to 2021. The increase was primarily the result of higher SG&A with no individually significant items, partially offset by lower costs associated with Seaboard’s deferred compensation program of $7 million. The deferred compensation program costs are offset by the effect of the mark-to-market on investments recorded in other investment income (loss), net.

Current wording

Selling, general and administrative (“SG&A”) expenses increased $17 million for the year ended December 31, 2024 compared to 2023. The increase was primarily due to higher personnel costs, partially offset by the $10 million adjustment to the contingent consideration liability recorded during 2023. SG&A expenses for the year ended December 31, 2023 increased $30 million compared to 2022. The increase was primarily due to higher personnel costs, including $7 million for the deferred compensation program, and an adjustment of the contingent consideration liability of $10 million.

Previous wording

Interest expense increased $18 million for the year ended December 31, 2023 compared to 2022. The increase in interest expense was primarily due to higher interest rates on outstanding debt, partially offset by an increase of $13 million in capitalized interest on construction in progress. Interest expense increased $27 million for the year ended December 31, 2022 compared to 2021. The increase primarily related to higher interest rates on outstanding debt.

Current wording

Interest expense increased $14 million for the year ended December 31, 2024 compared to 2023 primarily due to higher interest rates on more outstanding debt, partially offset by an increase of $7 million in capitalized interest on construction in progress. In November 2023, Seaboard amended its Term Loan Credit Agreement and increased the principal amount from $700 million to $975 million. Interest expense increased $18 million for the year ended December 31, 2023 compared to 2022 primarily due to higher interest rates on outstanding debt, partially offset by an increase of $13 million in capitalized interest on construction in progress.

Previous wording

Interest income increased $30 million for the year ended December 31, 2023 compared to 2022 and $10 million for the year ended December 31, 2022 compared to 2021. The increase wasprimarily due to higher interest rates on debt securities.

Current wording

Interest income increased $6 million for the year ended December 31, 2024 compared to 2023 and $30 million for the year ended December 31, 2023 compared to 2022 primarily due to higher interest rates on short-term investments.

Previous wording

Other investment income, net increased $324 million for the year ended December 31, 2023 compared to 2022. The increase was primarily due to unrealized mark-to-market gains on short-term investments and a $46 million charge recorded during 2022 related to a long-term solar energy investment. Other investment income, net decreased $372 million for the year ended December 31, 2022 compared to 2021. The decrease primarily reflected mark-to-market losses on short-term investments and the $46 million charge noted above. The charge on this long-term investment was offset with the benefit of the investment tax credits recorded in income tax benefit (expense).

Current wording

Other investment income, net decreased $66 million for the year ended December 31, 2024 compared to 2023. The decrease was primarily due to less unrealized mark-to-market gains on short-term investments. Other investment income, net increased $324 million for the year ended December 31, 2023 compared to 2022. The increase was primarily due to unrealized mark-to-market gains on short-term investments and a $46 million charge recorded during 2022 related to a long-term solar energy investment.

Previous wording

The 2023 effective tax rate was lower than the 2022 effective tax rate primarily due to lower earnings, more federal tax credits and a larger state tax benefit due to higher domestic losses. The 2022 effective tax rate was lower than the 2021

Current wording

The 2024 effective tax rate was higher than the 2023 effective tax rate primarily due to recording a $212 million valuation allowance on U.S. deferred tax assets. Seaboard has a history of using tax credits before they expire, and although U.S. generally accepted accounting principles (“GAAP”) required Seaboard to record a valuation allowance based on past results, management currently believes that these deferred tax assets will be realized in the future over time before they expire, although there can be no assurance as to the timing or if these will be realized at all. Seaboard’s federal tax credits have long carryforward periods that expire between 2042 and 2044. Despite recent pre-tax book losses in the U.S. operations as a result of challenging commodity conditions, Seaboard has no federal net operating loss carryforwards. The 2023 effective tax rate was lower than the 2022 effective tax rate primarily due to lower earnings, more federal tax credits and a larger state tax benefit due to higher domestic losses. See Note 12 to the consolidated financial statements for further information on Seaboard’s income taxes.

Previous wording

In 2021, the OECD released Pillar Two Model Rules (“Pillar Two”) to address the tax challenges of the digitalization of the economy. The rules under the model are designed to ensure large multinational enterprises pay a minimum level of tax on the income arising in each jurisdiction where they operate. The rules also include transitional safe harbors which provide temporary exemption of operations in some jurisdictions if certain criteria are met. Some jurisdictions in which Seaboard operates enacted Pillar Two legislation effective in 2024, but the impact will not be material to Seaboard in 2024. Seaboard will continue to monitor legislative developments across relevant jurisdictions and the potential impact on future results.

Current wording

In 2021, the OECD released Pillar Two as part of its Base Erosion and Profit Shifting initiative. The rules are designed to ensure large multinational companies pay a minimum level of tax on the income arising in each jurisdiction where they operate. The adoption and effective dates of these rules vary by country and the rules include some temporary safe harbors. Several countries in which Seaboard operates enacted Pillar Two laws in 2024, but the impact was not material to Seaboard. Additional countries in which Seaboard has operations have adopted Pillar Two rules effective in 2025. Overall, Seaboard will incur incremental income taxes related to Pillar Two due to operations in jurisdictions with effective tax rates that were lower than 15% prior to implementing the new rules, including but not limited to Isle of Man, the Bahamas and Monaco. Based on preliminary calculations, Seaboard does not expect additional tax cost of Pillar Two to be material in 2025. Seaboard will continue to monitor legislative developments related to Pillar Two in the countries in which it operates and the potential impact on future results.

Previous wording

Operating income for the Pork segment decreased $432 million for the year ended December 31, 2023 compared to 2022. The decrease primarily reflected $392 million in lower margins on pork products and market hogs due to lower sales prices and higher hog production costs, including higher feed costs of $98 million, and to a lesser extent, an increase in legal expense, partially offset by a decrease in adjustments to the lower of cost and net realizable value (“LCNRV”) inventory reserve of $41 million. An inventory adjustment has been necessary since the third quarter of 2022 to properly state the hog inventory balances at quoted future market prices for pork products and grain costs. Lower biodiesel and renewable diesel margins related to lower sales prices were partially offset with no mark-to-market derivative contract losses for the period compared to $35 million in 2022. Management is unable to predict market prices for pork products, biodiesel, renewable diesel, or related credits, or the costs of feed, third-party hogs or feedstock for future periods, but based on current market conditions, management anticipates the segment's profitability will be near break-even for 2024. Scheduled maintenance and repairs on the renewable diesel plant began in the fourth quarter of 2023 and will not be completed until early 2024, and as a result, renewable diesel operating income for the first quarter of 2024 will be impacted.

Current wording

The increase in operating income for the year ended December 31, 2024 compared to 2023 reflected higher margins on pork products and market hogs sold, primarily due to higher sale prices and lower hog production costs, including lower feed costs of $181 million, and to a lesser extent, a decrease in legal expenses. Also, inventory adjustments to the lower of cost and net realizable value (“LCNRV”) reserve resulted in an increase of $42 million in operating income based on a comparison of changes to the reserve per market prices at each respective period end. Inventory adjustments to the LCNRV reserve were necessary since the third quarter of 2022 to properly state the hog inventory balances at quoted future market prices for pork products and grain costs. With more favorable pork prices and lower grain commodity costs, the LCNRV reserve was not needed as of December 31, 2024. While management anticipates this segment to be profitable in 2025, it is difficult to predict market prices for pork products, the cost of feed or third-party hogs for future periods.

Previous wording

Operating income for the CT&M segment decreased $6 million for the year ended December 31, 2023 compared to 2022. Margins increased slightly year over year primarily due to lower commodity costs but were offset by the $10 million adjustment to the contingent consideration liability. Due to worldwide commodity price fluctuations, the uncertain political and economic conditions in the countries in which this segment operates and the volatility in the commodity markets, management is unable to predict sales and operating results for this segment for future periods. However, management anticipates positive operating income for this segment in 2024, excluding the effects of marked-to-market adjustments.

Current wording

Operating income decreased for the year ended December 31, 2024 compared to 2023 primarily due to lower margins driven by $22 million in mark-to-market losses on derivative contracts, partially offset by a $10 million contingent consideration liability adjustment recorded in the prior year. While management anticipates positive operating income, excluding the effects of mark-to-market adjustments, for this segment in 2025, it is difficult to predict worldwide commodity price fluctuations, the uncertain political and economic conditions in the countries in which this segment operates and the volatility in the commodity markets for future periods.

Previous wording

Income from affiliates decreased $39 million for the year ended December 31, 2023 compared to 2022. CT&M’s investments in affiliates are represented by numerous milling, feed, protein and trading affiliates, with no individual investment representing a material fluctuation. The decrease was primarily due to several entities challenged with lower margins due to higher costs and competition.

Current wording

Income from affiliates increased for the year ended December 31, 2024 compared to 2023. CT&M’s investments in affiliates are represented by numerous milling, feed and protein affiliates, with no individual investment representing a material fluctuation. The increase was primarily due to higher margins driven by lower commodity costs.

Previous wording

Net sales for the CT&M segment decreased $1.2 billion for the year ended December 31, 2023 compared to 2022. The decrease was primarily due to lower average sales prices, which decreased sales $619 million and lower volumes as a result of increased competition and market dynamics, which decreased sales $532 million. Sales prices for many of Seaboard’s products are directly affected by both domestic and worldwide supply and demand for commodities and competing products, all of which are determined by constantly changing market forces.

Current wording

Net sales decreased for the year ended December 31, 2023 compared to 2022 primarily due to lower average sales prices, which decreased sales $619 million, and lower volumes as a result of increased competition and market dynamics, which decreased sales $532 million.

Previous wording

cannot predict changes in fuel costs or other voyage-related costs, cargo volumes or cargo rates for future periods; however, management anticipates this segment will be profitable in 2024.

Current wording

The decrease in operating income for the year ended December 31, 2024 compared to 2023 was primarily the result of lower voyage revenue and increases in stevedoring and terminal costs, attributable to increased cargo volumes and rates. While management anticipates this segment will be profitable in 2025, it is difficult to predict changes in fuel costs or other voyage-related costs, cargo volumes or cargo rates for future periods.

Previous wording

Net sales for the Marine segment decreased $544 million for the year ended December 31, 2023 compared to 2022. The decrease was primarily due to an overall decline in both cargo volumes and freight rates. Cargo volumes decreased 17% for the year ended 2023 compared to the year ended 2022. The decline in cargo volumes and freight rates is primarily a result of a general decrease in demand for ocean transportation services.

Current wording

The decrease in net sales for the year ended December 31, 2023 compared to 2022 was primarily due to an overall decline in both cargo volumes and freight rates as a result of a general decrease in demand for ocean transportation services. Cargo volumes decreased 17% for the year ended 2023 compared to the year ended 2022.

Previous wording

Operating income for the Marine segment decreased $363 million for the year ended December 31, 2023 compared to 2022. The decrease was primarily the result of lower voyage revenue, partially offset by lower voyage-related costs, such as slot costs, fuel costs, terminal services and trucking costs due to the lower cargo volumes, and fuel prices. Management

Current wording

The decrease in operating income for the year ended December 31, 2023 compared to 2022 was primarily the result of lower voyage revenue, partially offset by lower voyage-related costs, such as slot costs, terminal services, trucking costs and fuel costs, due to the lower cargo volumes and fuel prices.

Previous wording

Net sales for the Pork segment decreased $89 million for the year ended December 31, 2023 compared to 2022. The change was due to adecrease in sales of $228 million for pork products and market hogs due primarily to lower market prices, partially offset by higher volumes of pork products sold that increased sales $37 million. The decrease was partially offset by a $91 million increase in biodiesel and renewable diesel sales and related credits due primarily to a $276 million increase in volumes sold from the renewable diesel plant in Hugoton, Kansas which began operations in the third quarter of 2022, partially offset by a decrease in prices of $116 million and timing of sales of associated credits of $69 million.

Current wording

The increase in net sales for the year ended December 31, 2023 compared to 2022 was primarily due to a $276 million increase in volumes sold from the renewable diesel plant in Hugoton, Kansas, which began operations in the third quarter of 2022. This increase was partially offset by lower market prices of fuel sold of $116 million and lower environmental credit sales of $69 million due to timing.

Previous wording

Operating income for the Power segment increased $57 million for the year ended December 31, 2023 compared to 2022. The increase was due to more revenue generated primarily from EDM III’s operations, partially offset primarily by an increase in fuel costs of $12 million and other costs related to EDM III. Management cannot predict fuel costs or the extent that spot market rates will fluctuate compared to fuel costs or other power producers for future periods; however, management anticipates this segment will be profitable in 2024. While EDM II remains in operation in the Dominican Republic, Seaboard continues to explore strategic alternatives for this barge, including a sale or relocation.

Current wording

The decrease in operating income for the year ended December 31, 2024 compared to 2023 was primarily a result of an increase in maintenance costs. While management anticipates this segment will be profitable in 2025, it is difficult to predict fuel costs or the extent that spot market rates will fluctuate compared to fuel costs or other power producers for future periods.

Previous wording

Net sales for the Power segment increased $79 million for the year ended December 31, 2023 compared to 2022. More power generation from EDM III, that began operations in June 2022, contributed to an increase in sales of $60 million. EDM II, the power-generating barge which began operations in 2012, increased its dispatch volume in 2023 primarily due to improved availability of competitively priced fuel.

Current wording

The increase in net sales for the year ended December 31, 2023 compared to 2022 was primarily driven by more power generation from EDM III, which began operations in June 2022, contributing to an increase in sales of $60 million.

Previous wording

The Turkey segment, accounted for using the equity method, represents Seaboard’s 52.5% investment in Butterball. Income from affiliate decreased $16 million for the year ended December 31, 2023 compared to 2022 as Butterball’s net income decreased $30 million for the year ended December 31, 2023 compared to 2022. The decrease in net income was primarily the result of income recorded in the prior year related to a $21 million gain on the sale of businesses, and $11 million of mark-to-market gains on interest-rate swap agreements that were terminated in 2022. The decrease was partially offset by higher margins with a stronger mix of value-added products sold and production efficiencies. Volumes sold decreased 7% for the year ended December 31, 2023 compared to 2022. Management is unable to predict market prices for turkey products or the cost of feed for future periods; however, management anticipates this segment will be profitable in 2024.

Current wording

The decrease in Butterball’s net income of $30 million for the year ended December 31, 2023 compared to 2022 was primarily the result of income recorded in 2022 related to a $21 million gain on the sale of businesses and $11 million of mark-to-market gains on interest-rate swap agreements that were terminated in 2022. The decrease was partially offset by

Previous wording

The preparation of Seaboard’s consolidated financial statements requires Seaboard to make estimates, judgments, and assumptions. See Note 1 to the consolidated financial statements for a discussion of significant accounting policies. Management has identified the accounting estimate believed to be the most important to the portrayal of Seaboard’s financial condition and results of operations, and that requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of inherently uncertain matters. Management has reviewed this critical accounting estimate with the Audit Committee of the Board of Directors.

Current wording

The preparation of Seaboard’s consolidated financial statements requires management to make estimates, judgments and assumptions. See Note 1 to the consolidated financial statements for a discussion of significant accounting policies. Management has identified the accounting estimates believed to be the most important to the portrayal of Seaboard’s financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of inherently uncertain matters. Management has reviewed these critical accounting estimates with the Audit Committee of the Board of Directors.

Previous wording

Accrued Pension Liability – The measurement of Seaboard’s pension liability and related expense is dependent on a variety of assumptions and estimates regarding future events. These assumptions include discount rates, assumed rate of return on plan assets, compensation increases, mortality rates and retirement rates. The discount rate and return on plan assets are important elements of liability and expense measurement and are reviewed on an annual basis. The effect of decreasing both the discount rate and assumed rate of return on plan assets by 50 basis points would have a minimal impact on pension expense. The effects of actual results differing from the assumptions (i.e. gains or losses) are primarily accumulated in accrued pension liability and amortized over future periods, if it exceeds the 10% corridor and therefore, could affect Seaboard’s recognized pension expense in such future periods as permitted under generally accepted accounting principles (“GAAP”). See Note 9 to the consolidated financial statements for discussion of the pension rates and assumptions.

Current wording

Accrued Pension Liability – The measurement of Seaboard’s pension liability and related expense is dependent on a variety of assumptions and estimates regarding future events. These assumptions include discount rates, assumed rate of return on plan assets, compensation increases, mortality rates and retirement rates. The discount rate and return on plan assets are important elements of liability and expense measurement and are reviewed on an annual basis. The effect of decreasing both the discount rate and assumed rate of return on plan assets by 50 basis points would have an immaterial impact on pension expense. The effects of actual results differing from the assumptions (i.e. gains or losses) are primarily accumulated in accrued pension liability and amortized over future periods if they exceed the 10% corridor and therefore could affect Seaboard’s recognized pension expense in such future periods as permitted under U.S. GAAP. See Note 9 to the consolidated financial statements for discussion of the pension rates and assumptions.