SEABOARD CORP /DE/ (SEB)

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, Seaboard’s consolidated financial statements and the accompanying notes included in this quarterly report on Form 10-Q and within Seaboard’s 2025 10-K. Certain statements in this report contain forward-looking statements. See the section entitled “Forward-looking Statements” for more information on these forward-looking statements, including a discussion of the most significant factors that could cause actual results to differ materially from those in the forward-looking statements.

LIQUIDITY AND CAPITAL RESOURCES

The primary objectives of Seaboard’s financing strategy are to effectively manage financial risks, ensure efficient liquidity for daily global operations and maintain balance sheet strength. Seaboard’s principal funding sources are cash provided by operating activities, proceeds from sales of short-term investments and borrowings from revolving lines of credit and term loans. Seaboard’s cash requirements primarily consist of working capital, capital expenditures, strategic investments and other general corporate needs. Seaboard evaluates its overall liquidity at least quarterly, and management believes that Seaboard’s internally-generated cash, together with its available liquidity and borrowing capacity, will be adequate to meet all of its short-term and long-term commitments.

As of July 4, 2026, Seaboard had cash and short-term investments of nearly $1.2 billion and additional net working capital of $1.2 billion. Of the total cash and short-term investments balances, $136 million was held by foreign subsidiaries.

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

Available borrowing capacity fluctuates based on changes to the terms of line of credit agreements and draws needed to fund operations. Seaboard will continue to evaluate opportunities to access cost-effective financing in the markets where it operates, leveraging low-cost funding sources to support its operations.

Seaboard had long-term debt of $972 million as of July 4, 2026, which included a Term Loan due 2033 of $948 million. Current maturities of long-term debt were $11 million as of July 4, 2026. See Note 4 to the condensed consolidated financial statements for more discussion of Seaboard’s lines of credit and long-term debt.

Cash Flows

Cash used in operating activities was $30 million for the six months ended July 4, 2026, compared to cash provided by operating activities of $61 million for the same period in 2025. This change was primarily due to a $160 million increase in cash used for working capital, partially offset by a $59 million increase in dividend payments received from equity method investments. The increase in cash used for working capital was attributable to increases in inventory, primarily due to the timing of sales and inventory purchases in Seaboard’s CT&M segment, and accounts receivable, related to higher sales in the Liquid Fuels and CT&M segments. The CT&M segment handles large shipments of grain, so the timing of these deliveries can result in significant working capital fluctuations across periods. During the second quarter of 2026, Seaboard sold 2025 production tax credits, accounted for as inventory, and received proceeds of $55 million, net of discount and transaction fees. The increases in inventory and accounts receivable were partially offset by the timing of accounts payable disbursements.

Cash used in investing activities was $137 million for the six months ended July 4, 2026, compared to $201 million for the same period in 2025. This change was primarily due to lower capital expenditures of $62 million. During the six months ended July 4, 2026, Seaboard invested $198 million in property, plant and equipment, including $79 million in the Power segment, consisting primarily of installment payments for EDM IV, a new barge currently under construction. Cash flows from investing activities for short-term investments are part of Seaboard’s overall liquidity management strategy. Short-term investment purchases result from the investment of excess cash, asset allocation decisions arising from the active management of the portfolio and re-investment of matured securities. Seaboard continues to explore strategic acquisitions and investments to further grow and diversify its operations.

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Cash provided by financing activities was $133 million for the six months ended July 4, 2026, compared to $150 million for the same period in 2025. Cash flows from financing activities primarily include draws and repayments under committed and uncommitted revolving facilities held with financial institutions across multiple jurisdictions and currencies. Changes in Seaboard’s borrowing balances are primarily driven by its daily working capital needs. Seaboard did not repurchase any shares under its share repurchase program during the six months of 2026. As of July 4, 2026, $62 million remained available for repurchase under the program. Seaboard is not obligated to repurchase a minimum number of shares under the program and Seaboard cannot predict when, or if, it will repurchase any shares or the amount of any such repurchases. See Note 6 to the condensed consolidated financial statements for more discussion of Seaboard’s share repurchase program.

Capital Expenditures

For the remainder of 2026, management has budgeted capital expenditures totaling approximately $305 million, including approximately $60 million for the Power segment’s construction of EDM IV, with the remainder allocated to several individually immaterial projects across the remaining segments. Management anticipates funding these capital expenditures through a combination of available cash, proceeds from sales of short-term investments and Seaboard’s available borrowing capacity.

Future Contractual Obligations

In February 2026, the Marine segment entered into an amended and restated LNG fuel supply contract for its LNG-fueled vessels. As of execution, the total minimum fuel purchase commitment over the eight-year contract term was approximately $335 million, calculated using market prices for the variable price component as of the end of the first quarter of 2026. There were no other material updates to Seaboard’s obligations as discussed in the 2025 10-K.

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RESULTS OF OPERATIONS

Seaboard’s operations are heavily commodity-driven, and the financial performance for certain subsidiaries is highly cyclical, depending on trends in the applicable global commodity markets and broader economic activity. The conflict involving Iran, which began in late February 2026 and continued through the second quarter, has resulted in higher fuel prices, higher shipping costs, increased volatility in commodity markets and broader macroeconomic uncertainty, among other factors. Where possible, Seaboard’s segments pass on higher fuel costs through a fuel surcharge or other pricing mechanism. See Item 1A. Risk Factors for an update to the risk factors set forth in Seaboard’s 2025 10-K.

Net Sales

Net sales increased $442 million and $526 million for the three- and six-month periods of 2026, respectively, compared to the corresponding periods in 2025. These increases were driven primarily by higher Liquid Fuels segment sales of $224 million and $300 million, respectively, due to increased environmental credit and fuel sales, and higher CT&M segment sales of $208 million and $188 million, respectively, due to increased volumes of commodities sold. See the net sales discussion by reportable segment below for more details.

Operating Income

Operating income increased $48 million and $106 million for the three- and six-month periods of 2026, respectively, compared to the corresponding periods in 2025. These increases were primarily driven by higher Liquid Fuels segment operating income of $79 million and $142 million, respectively, reflecting increased volumes and margins, partially offset by decreased Marine segment operating income of $37 million and $60 million, respectively, due to higher overall voyage-related costs. See the operating income discussion by reportable segment below for more details.

Income Tax Expense

Seaboard computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income, adjusted for discrete items recorded during the period. The effective tax rate for the three- and six-month periods of 2026 increased compared to the corresponding periods of 2025, primarily because Seaboard recognized less U.S. income tax expense in 2025 due to its U.S. valuation allowance position. In July 2025, the U.S. enacted the One Big Beautiful Bill Act (“OBBBA”). The international effects of the OBBBA, effective beginning on January 1, 2026, were not material to the three- and six-month periods ended July 4, 2026.

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Segment Results

See Note 7 to the condensed consolidated financial statements for a reconciliation of net sales and operating income (loss) by reportable segment to consolidated net sales and consolidated operating income (loss), respectively.

Pork Segment

The decrease in net sales for the three- and six-month periods of 2026 compared to corresponding periods in 2025 primarily reflected lower prices and volumes of pork products sold. Lower market prices decreased sales by $18 million and $19 million, respectively, and lower volumes, driven by reduced availability of hogs, decreased sales by $17 million and $13 million, respectively. Market hog sales were relatively flat for both the three- and six-month periods, as a slight increase in volumes sold to a non-consolidated affiliate for processing were mostly offset by decreased prices. Market prices for pork products and hogs remain inherently volatile and can fluctuate significantly in response to shifts in domestic and global supply and demand.

The decrease in operating income for the three-month period of 2026 compared to the same period in 2025 primarily reflected lower sales prices and higher costs per unit of pork products sold, partia

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, Seaboard’s consolidated financial statements and the accompanying notes in Item 8. Certain statements in this report contain forward-looking statements. See the introduction in Item 1 for more information on these forward-looking statements, including a discussion of the most significant factors that could cause actual results to differ materially from those in the forward-looking statements. For discussion related to the results of operations for 2024 compared to 2023 refer to Part II Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in Seaboard’s Form 10-K for the year ended December 31, 2024.

OVERVIEW

Seaboard’s operations are heavily commodity-driven and financial performance for certain segments is cyclical based on respective global commodity markets and trends in economic activity. During 2025, the U.S. government imposed tariffs and trade restrictions on certain products from some foreign jurisdictions, and in response to these actions, some countries imposed retaliatory tariffs on certain products produced in the U.S. The impact of tariffs was not material to Seaboard’s 2025 results; however, Seaboard continues to monitor the current uncertainties with tariffs and other geopolitical conditions. Seaboard cannot be certain of the outcome, which could indirectly or directly adversely impact its future

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financial condition and results of operations. See Item 1A. Risk Factors for further discussion of risks associated with tariffs and other geopolitical conditions.

Pork Segment

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 41% of Seaboard’s total fixed assets and approximately 37% of total inventories as of December 31, 2025. 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, but sales are not significant as most facilities are in the early stages of operation. Consistent production at each facility 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.

CT&M Segment

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. Consolidated subsidiaries and non-consolidated affiliates operate the grain milling 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. This segment represents approximately 37% of Seaboard’s total inventories as of December 31, 2025.

Marine Segment

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.

Liquid Fuels Segment

The Liquid Fuels segment produces biodiesel and renewable diesel and generates related environmental credits, specifically LCFS credits and RINs, and production tax credits. The profitability of this segment is impacted by world diesel prices, the market prices of pork fat, other animal fats and vegetable oils, all of which are utilized to produce biodiesel and renewable diesel, government mandates and incentives to use biofuels and the market price of environmental credits.

Power Segment

The Power segment is an independent power producer in the Dominican Republic. Spot market rates are impacted by fuel prices and the various producers supplying power to the grid. While fuel is this segment’s largest cost component and is subject to price fluctuations, higher fuel costs generally have been passed on to customers.

Turkey Segment

The Turkey segment represents Seaboard’s 52.5% non-controlling investment in Butterball, which is accounted for using the equity method of accounting. 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.

LIQUIDITY AND CAPITAL RESOURCES

The primary objectives of Seaboard’s financing strategy are to effectively manage financial risks, ensure efficient liquidity for daily global operations and maintain balance sheet strength. Seaboard’s principal funding sources are generated from operating activities, short-term investments and borrowings from lines of credit and term loans. Seaboard’s cash

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requirements primarily include funding for working capital, capital expenditures, strategic investments and other needs. Management evaluates overall liquidity at least on a quarterly basis, and management believes Seaboard’s combination of internally-generated cash, liquidity and borrowing capabilities will be adequate to meet all short-term and long-term commitments.

As of December 31, 2025, Seaboard had cash and short-term investments of $1.2 billion and additional total working capital of $890 million. As of December 31, 2025, $161 million of the $1.2 billion of cash and short-term investments were held by Seaboard’s foreign subsidiaries. Seaboard considers substantially all foreign profits permanently reinvested in its foreign operations, except for previously-taxed undistributed earnings of Seaboard Marine and earnings of certain other foreign subsidiaries.

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

Available borrowing capacity fluctuates based on changes to the terms of line of credit agreements and draws needed to fund operations. During 2025, Seaboard reduced its borrowing capacity under the committed line of credit from $450 million to $300 million.

As of December 31, 2025, Seaboard had long-term debt of $991 million, which included the Term Loan due 2033 of $953 million. Current maturities of long-term debt were $11 million as of December 31, 2025. See Note 7 to the consolidated financial statements for more discussion on lines of credit and long-term debt. Seaboard will continue to evaluate opportunities to access efficient financing in the markets where it operates, leveraging low-cost funding to support its operations.

Cash Flows

Cash generated from operating activities was $568 million for the year ended December 31, 2025, compared to $519 million for 2024. The increase in operating cash flows was due to an increase in earnings, adjusted for non-cash items of $57 million, larger proceeds from investment tax credit sales of $53 million and increased dividend payments received of $27 million from equity method investments, partially offset by an increase in cash used for working capital of $88 million. The working capital fluctuation was primarily inventory-related due to production tax credits in Seaboard’s Liquid Fuels segment, and to a lesser extent, timing of sales and related cash receipts and inventory purchases in Seaboard’s Pork segment. There have been no sales of production tax credits to monetize this inventory during 2025.

Cash used in investing activities was $543 million for the year ended December 31, 2025, compared to $484 million for 2024. During 2025, Seaboard invested $562 million in property, plant and equipment, an increase of $51 million from the same period in the prior year. Of the 2025 total investment, $302 million was in the Marine segment, consisting primarily of installment payments on vessels under construction. Six new dual-fueled vessels were completed and delivered during 2025, the last of the original eight ordered vessels. In 2025, Seaboard Marine entered into an agreement to build a ninth new vessel at a cost of approximately $75 million. The new dual-fueled vessels bring greater fuel efficiency, increased twenty-foot equivalent unit (“TEU”) capacity and a host of other advantages to the Marine segment’s fleet and create a better overall fleet balance of owned and chartered vessels. 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 re-investment of matured securities. Also, during 2025, Seaboard rebalanced its short-term investments portfolio using different investment vehicles in some cases, such as private funds. See Note 2 to the consolidated financial statements for further discussion. Additionally, during 2025, Seaboard continued to invest in long-term investments with a $50 million purchase of equity interests in a fund that owns corporate debt securities.

Cash provided by financing activities was $44 million for the year ended December 31, 2025, compared to $12 million for 2024. Cash flows from financing activities primarily include draws and repayments under committed and uncommitted lines of credit held with financial institutions across multiple jurisdictions and currencies. The daily needs for working capital primarily influence ch

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