Executive Summary / Key Takeaways

• Seaboard Corporation ($SEB) demonstrates resilience through its diversified global agribusiness, energy, and ocean transportation segments, leveraging an integrated operational model to mitigate sector-specific volatilities.
• Recent financial performance for the nine months ended September 27, 2025, shows a significant turnaround with net earnings attributable to Seaboard of $243 million, a substantial increase from $66 million in the prior year, driven by strong contributions from Marine and Pork segments.
• Strategic capital investments in modern, fuel-efficient dual-fueled vessels for the Marine segment and a new 150-megawatt power-generating barge in the Dominican Republic underscore a commitment to operational efficiency and long-term growth.
• The company's Liquid Fuels segment is adapting to new clean fuel production tax credits, with its value tied to greenhouse gas emissions factors, indicating a focus on environmentally aligned technologies that directly impact profitability.
• While management anticipates profitability across most segments for the remainder of 2025, the inherent unpredictability of global commodity prices, geopolitical conditions, and ongoing legal challenges present notable risks to future performance.

A Global Conglomerate's Enduring Strength

Seaboard Corporation ($SEB), a venerable entity founded in 1918, stands as a testament to diversified operational excellence across critical global sectors. Its expansive footprint spans agricultural, energy, and ocean transportation businesses, encompassing six core reportable segments: Pork, Commodity Trading and Milling (CTM), Marine, Liquid Fuels, Power, and Turkey, alongside other ventures like sugar and alcohol production. This broad diversification is not merely a collection of businesses but a strategically integrated ecosystem designed to foster resilience against the cyclical nature of commodity markets and regional economic shifts. The company's overarching strategy centers on robust financial risk management, ensuring ample liquidity for its extensive global operations, and maintaining a formidable balance sheet.

Seaboard's historical journey has shaped its current strategic responses to market dynamics. Its long-standing presence in commodity-driven industries means that financial performance is inherently tied to global supply and demand. This deep understanding has led to a business model that seeks synergies across its segments, such as the intersegment sales of pork fat from the Pork segment to the Liquid Fuels segment for renewable diesel and biodiesel production. This integration helps optimize costs and enhance overall efficiency, providing a qualitative edge in cost structure through shared resources.

The company operates within a dynamic industry landscape. In the agribusiness sector, it competes with giants like Tyson Foods (TSN) in pork and Archer Daniels Midland (ADM) and Bunge Limited (BG) in commodity trading and milling. In power generation, it faces competition from other power producers, and in ocean transportation, it contends with various cargo shipping services. Seaboard's diversified portfolio provides a unique value proposition, offering a broader operational base compared to more focused competitors. This diversification can offer resilience against sector-specific downturns, differentiating it from rivals whose exposures are more concentrated.

Technological Edge and Strategic Investments

Seaboard's strategic investments in technology and infrastructure are crucial to its competitive positioning and long-term growth. In the Marine segment, the company has been actively modernizing its fleet with advanced dual-fueled vessels. Five such vessels were delivered in the first nine months of 2025, with another expected in the fourth quarter of 2025, and an agreement to build a ninth vessel for approximately $75 million was made in August 2025. These new vessels are designed to bring greater fuel efficiency and increased tonnage capacity, offering tangible benefits in operational costs and service capabilities. This fleet upgrade enhances the Marine segment's competitive moat by improving its ability to handle higher cargo volumes more efficiently, thereby strengthening its market position against other cargo shipping services.

The Liquid Fuels segment showcases a technological differentiator tied to environmental sustainability. With the replacement of the federal blenders tax credit by a new clean fuel production tax credit under the U.S. Inflation Reduction Act of 2022, the value of this credit is now based on the "greenhouse gas emissions factor of fuel produced." This incentivizes the production of cleaner fuels, implying that Seaboard's processes or feedstocks allow it to achieve favorable emissions factors. This technological alignment with environmental goals directly impacts profitability, as the credit is recognized as a reduction to cost of sales. It also positions Seaboard advantageously in the evolving clean energy market, potentially offering a cost advantage over competitors with less efficient production methods.

Furthermore, the Power segment is expanding its generation capabilities with a significant capital project. In the third quarter of 2025, an agreement was made to construct a 150-megawatt power-generating barge for operation in the Dominican Republic by 2028, at an estimated cost of $315 million. This expansion, coupled with a related 10-year natural gas supply contract valued at approximately $1.30 billion, addresses growing energy demand, a trend amplified by the global rise in AI-driven data centers. This investment not only expands Seaboard's capacity but also secures long-term revenue streams, enhancing its competitive standing in regional power markets. The company is also exploring strategic alternatives, including sale or relocation, for its older EDM II barge, indicating a proactive approach to optimizing its power generation assets.

Financial Performance and Operational Momentum

Seaboard's financial performance for the nine months ended September 27, 2025, reflects a significant improvement, with net earnings attributable to Seaboard reaching $243 million, a substantial increase from $66 million in the same period of 2024. Earnings per common share also saw a robust rise to $251.47 from $67.97 year-over-year. Total net sales for the nine-month period increased by $718 million to $7.34 billion, compared to $6.62 billion in 2024, demonstrating broad-based growth across several segments. Operating income for the nine-month period surged to $174 million from $42 million in the prior year, highlighting enhanced operational effectiveness.

The Pork segment experienced a notable turnaround, with operating income for the three months ended September 27, 2025, jumping to $58 million from $12 million in the prior year. This was primarily driven by higher selling prices for pork products and market hogs, coupled with lower feed costs, which contributed $33 million in savings. For the nine-month period, operating income rose to $55 million from $9 million, largely due to strong third-quarter results. While sales volumes were slightly lower due to hog availability and delivery timing, improved margins underscore the segment's efficiency.

The Commodity Trading and Milling (CTM) segment reported net sales of $3.92 billion for the nine months ended September 27, 2025, an increase of $482 million from $3.44 billion in 2024. This growth was primarily due to higher volumes of commodities sold. Operating income for the nine-month period increased slightly to $85 million from $83 million, benefiting from decreases in mark-to-market losses on derivative contracts, although partially offset by lower margins on certain commodities.

The Marine segment was a significant contributor to the overall improvement, with net sales for the nine-month period increasing by $180 million to $1.16 billion, driven by higher freight rates and an 8% increase in cargo volumes. Operating income for the same period soared to $119 million from $32 million, primarily due to higher voyage revenue. This performance reflects the benefits of increased demand and the ongoing fleet modernization efforts.

The Liquid Fuels segment, while still reporting an operating loss of $89 million for the nine-month period, showed an improvement from a loss of $100 million in 2024. Net sales increased by $58 million to $445 million, primarily due to higher fuel and environmental credit sales. The segment is adapting to the new clean fuel production tax credit, which accounted for 54% of the income generated by the prior federal blenders tax credit in the nine-month period. Higher feedstock costs, up 20% year-over-year, partially offset these gains.

The Power segment's net sales remained relatively stable at $176 million for the nine months, with operating income decreasing to $37 million from $45 million. This decline was primarily attributed to an $11 million increase in fuel costs due to higher consumption of more expensive heavy fuel oil, partially offset by $3 million in lower maintenance costs. The Turkey segment, representing Seaboard's 52.50% investment in Butterball, LLC, saw its income from affiliates double to $43 million for the nine-month period, driven by increased sales volumes (up 8%) and higher prices (up 4%) for turkey products, coupled with lower feed costs and improved bird health.

Liquidity and Capital Allocation

Seaboard maintains a robust liquidity position, with total net working capital of $2.10 billion as of September 27, 2025, including $1.20 billion in cash and short-term investments. Management believes this, combined with available borrowing capacity of $924 million under lines of credit, will be adequate to meet all short-term and long-term commitments. Cash from operating activities for the nine months ended September 27, 2025, was $380 million, a significant increase from $219 million in the prior year, bolstered by increased earnings and $77 million from investment tax credit sales.

Capital expenditures for the nine-month period totaled $427 million, an increase of $54 million from 2024, with $253 million directed towards the Marine segment's vessel construction program. For the remainder of 2025, management has budgeted approximately $170 million in capital expenditures, primarily for Marine segment vessel payments and Pork segment investments. In May 2025, the Board of Directors authorized a $100 million share repurchase program through December 2027, under which $38 million of shares had been repurchased as of September 27, 2025, signaling a commitment to shareholder returns.

Outlook and Risk Considerations

Management anticipates profitability for the remainder of 2025 across most segments, including Pork, CTM, Marine, Power, and Turkey. However, these outlooks are tempered by the inherent unpredictability of global commodity prices, fuel costs, and geopolitical conditions. The Liquid Fuels segment's profitability for the remainder of 2025 remains uncertain, contingent on market prices for biodiesel, renewable diesel, environmental credits, production tax credits, feedstock costs, and production levels.

Key risks include ongoing legal proceedings, such as the Helms-Burton Act Litigation, Pork Price-Fixing Antitrust Litigation, and Cereoil and Nolston Litigation. While Seaboard maintains meritorious defenses, the unpredictable nature of litigation could result in material liabilities. The company's heavy reliance on commodity markets exposes it to price fluctuations, which can materially impact earnings, especially given that derivative contracts are not accounted for as hedges.

Furthermore, changes in U.S. trade policy and tariffs, such as China's retaliatory tariffs on U.S. pork, pose a risk of reduced sales in certain markets and increased costs. While the impact has not been material in 2025, the uncertainty and potential for further escalation could adversely affect future financial conditions. The adoption of Pillar Two tax rules in certain international jurisdictions and the ongoing evaluation of the One Big Beautiful Bill Act (OBBBA) also introduce potential impacts on future tax expense and effective tax rates. The realization of deferred tax assets is another factor to monitor, as a reversal of the valuation allowance could materially impact income tax expense.

Conclusion

Seaboard Corporation's diversified business model, underpinned by strategic capital investments and a proactive approach to operational efficiency, positions it as a resilient player in volatile global markets. The significant improvements in net earnings and operating income for the nine months ended September 27, 2025, particularly in the Marine and Pork segments, underscore the effectiveness of its integrated strategy. The company's commitment to modernizing its fleet with fuel-efficient vessels and expanding its power generation capacity with a 150-megawatt barge, alongside its adaptation to clean fuel production tax credits, highlights a forward-looking approach to leveraging technological advancements for competitive advantage.

While the inherent cyclicality of commodity markets and ongoing legal and geopolitical risks demand careful monitoring, Seaboard's strong liquidity, disciplined capital allocation, and diversified revenue streams provide a robust foundation. The ability to generate substantial cash from operations and its share repurchase program further enhance its appeal. For discerning investors, Seaboard represents a compelling opportunity in a company that balances global reach and operational integration with a strategic focus on efficiency and sustainability, poised to capitalize on evolving industry trends despite persistent market uncertainties.