Seaboard(US:SEB)2023-02-14 21:22Business Segments - Seaboard operates in six reportable segments: Pork, CT&M, Marine, Sugar and Alcohol, Power, and Turkey, with a focus on essential goods and services[18]. - The Pork segment includes a vertically integrated operation with a processing capacity of approximately six million market hogs annually at the Seaboard Triumph Foods plant in Iowa[20]. - In 2022, Seaboard's Pork segment sold a 50% interest in its ham-boning and processing plant in Mexico to Triumph[20]. - The CT&M segment sources and markets approximately 14 million metric tons of agricultural commodities annually, primarily in Africa and South America[37]. - Seaboard's Marine segment operates a fleet of 17 chartered and six owned vessels, providing cargo shipping services in the U.S. and 26 countries in the Caribbean and Central and South America[24]. - The Sugar and Alcohol segment operates a vertically integrated facility in Argentina, supplying approximately 80% of the sugar cane processed from its own land[25]. - The Power segment generates electricity using two power-generating barges, with EDM III capable of producing approximately 148 megawatts of electricity[26]. - Seaboard's Turkey segment holds a 52.5% noncontrolling interest in Butterball, a major supplier of turkey products in the U.S.[27]. Employment and Workforce - As of December 31, 2022, Seaboard employed approximately 13,000 people, with 52% in the U.S., 31% in the Caribbean and Latin America, and 17% in Africa[41]. - The Pork segment had a retention rate of approximately 75% in 2022, with about 25% of its workforce dependent on employment visas[44]. - Seaboard provides competitive pay and benefits, including a company-sponsored 401K retirement savings plan for eligible domestic employees[45]. - The company offers on-the-job training and professional development opportunities, including tuition reimbursement for eligible employees in the Pork segment[47]. - 40% of Seaboard's board of directors are female, highlighting the company's commitment to global diversity[48]. Financial Performance - Seaboard's net sales for 2022 reached $11.2 billion, up from $9.2 billion in 2021, reflecting a significant increase in commodity prices and freight rates[122]. - Operating income for 2022 was $657 million, compared to $458 million in 2021, driven by higher voyage revenue in the Marine segment and improved margins in the CT&M segment[123]. - Net sales for the Pork segment increased by $124 million to $2,605 million for the year ended December 31, 2022, compared to 2021[124]. - Operating income for the Pork segment decreased by $323 million to a loss of $96 million for the year ended December 31, 2022, primarily due to higher costs of hogs and feed[125]. - Net sales for the CT&M segment increased by $1.1 billion to $6,290 million for the year ended December 31, 2022, compared to 2021[129]. - Operating income for the CT&M segment increased by $90 million to $151 million for the year ended December 31, 2022, reflecting higher margins on certain commodities[130]. - Net sales for the Marine segment increased by $647 million to $2,043 million for the year ended December 31, 2022, compared to 2021[135]. - Operating income for the Marine segment increased by $394 million to $591 million for the year ended December 31, 2022, primarily due to higher voyage revenue[136]. - Net sales for the Sugar and Alcohol segment increased by $6 million to $129 million for the year ended December 31, 2022, compared to 2021[139]. - Operating income for the Sugar and Alcohol segment increased by $9 million to $11 million for the year ended December 31, 2022, primarily due to higher margins[140]. - Net sales for the Power segment increased by $98 million to $158 million for the year ended December 31, 2022, compared to 2021[143]. - Operating income for the Power segment increased by $23 million to $14 million for the year ended December 31, 2022, primarily due to higher revenues[144]. Risks and Challenges - Seaboard's international operations face risks such as currency fluctuations, trade barriers, and government instability, which could impact financial performance[65]. - The ongoing conflict in Ukraine may affect global commodity prices and margins, potentially impacting Seaboard's financial condition[65]. - Economic conditions, including inflation and supply chain disruptions, could adversely affect the demand for Seaboard's products[66]. - The geographic areas where Seaboard operates have experienced labor shortages, resulting in higher labor costs that could adversely affect operations[10]. - The closure or damage to key processing plants, such as the Oklahoma pork processing plant, could materially impact Seaboard's business and financial condition[11]. - Fluctuations in commodity prices, particularly for feed components like corn and soybean meal, significantly affect operating margins in the Pork and Turkey segments[9]. - Approximately 5% of Seaboard's direct sales in 2022 were affected by California and Massachusetts regulations on pork sales, highlighting regulatory risks[12]. - Cybersecurity breaches pose a risk to Seaboard's operations, potentially disrupting business and negatively impacting financial results[4]. - The company faces risks related to food contamination, which could harm brand reputation and lead to decreased revenues[8]. - Legal and regulatory risks, including ongoing litigation and compliance with complex laws, could negatively affect Seaboard's financial results[12]. Capital Expenditures and Investments - Seaboard plans to invest approximately $750 million in capital expenditures for 2023, with $475 million allocated to the Pork segment and $200 million to the Marine segment[117]. - The company invested $474 million in property, plant, and equipment during 2022, with significant investments in biogas recovery projects in the Pork segment[116]. - Seaboard's future obligations include approximately $1.6 billion in current purchase commitments for materials or supplies related to hog, grain, feedstock, and fuel procurement[121]. Assets and Liabilities - Cash and short-term investments totaled nearly $1.3 billion as of December 31, 2022, with additional total working capital of $1.2 billion[113]. - The company experienced a decrease of $206 million in cash and short-term investments from the previous year, primarily due to capital expenditures and unrealized losses on short-term investments[115]. - Seaboard's available borrowing capacity as of December 31, 2022, was $668 million after drawing $457 million against its lines of credit[114]. - Total assets grew to $7,902 million in 2022, an increase from $7,503 million in 2021[177]. - Total liabilities decreased to $2,888 million in 2022 from $3,069 million in 2021[177]. - Retained earnings increased to $5,417 million in 2022, up from $4,847 million in 2021[177]. Research and Development - Seaboard's research and development efforts focus on improving hog genetics, health, feed efficiency, and the development of biodiesel and renewable diesel facilities[36]. - Seaboard incurred research and development expenses of $210 million, $191 million, and $134 million for the years ended December 31, 2022, 2021, and 2020, respectively[207]. Tax and Regulatory Matters - The effective tax rate for 2022 was lower than in 2021 due to increased federal investment tax credits and a favorable mix of foreign and domestic earnings[153]. - A hypothetical increase of 5% in the future U.S. federal income tax rate would decrease tax expense on the reversal of timing differences by approximately $3 million[156]. - The company recorded income tax payments of $101 million in 2022, slightly down from $104 million in 2021[189]. Financial Position and Performance Metrics - Gross income rose to $1,030 million in 2022, representing a 26% increase from $818 million in 2021[174]. - Net earnings attributable to Seaboard were $580 million in 2022, compared to $570 million in 2021, reflecting a slight increase[174]. - Earnings per common share increased to $499.66 in 2022, up from $490.36 in 2021[174]. - Comprehensive income attributable to Seaboard was $590 million in 2022, slightly down from $609 million in 2021[179]. - Seaboard Corporation's total receivables increased to $954 million in 2022 from $793 million in 2021, representing a growth of approximately 20.3%[191]. - The allowance for credit losses remained stable at $31 million for both 2022 and 2021, indicating effective management of credit risk[193].