Core Insights - PG&E has reduced electric rates for the fourth time in two years due to accelerated large load growth, although wildfire costs remain a challenge for affordability [1] Group 1: Large Load Growth and Electric Rates - The total large load pipeline decreased from 9.6 GW in September 2025 to 7.3 GW by the end of the year, but new projects are entering final engineering phases [2] - PG&E estimates that it can lower customer electric bills by approximately 1% for each gigawatt of new load added to the system [2] - Rapid adoption of electric vehicles (EVs) is increasing electricity demand in PG&E's service area, alongside expected growth from California's manufacturing sector [2][3] Group 2: Wildfire Management and Capital Plans - There has been a 43% decline in wildfire ignitions linked to PG&E equipment [5] - PG&E's five-year capital plan is set at $73 billion, with no current plans to update it despite potential additional growth opportunities of $5 billion [6][7] - The company will not issue new equity under its current five-year plan but plans to issue up to $4.6 billion in debt in 2026 to maintain investment-grade credit ratings [8] Group 3: Legislative and Policy Developments - The California Earthquake Authority is expected to release a report on wildfire fund reforms on April 1, which may initiate legislative changes aimed at improving wildfire-related legal claims reimbursement [9]

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Financial Data and Key Metrics Changes - The company reported adjusted earnings of $5.27 per share for the full year 2025, an increase of $0.39 per share compared to 2024 [3][14] - Adjusted earnings from utility operations increased by $0.63 in 2025 compared to 2024, with weather positively impacting utility earnings by approximately $0.35 [14][15] - The company expects long-term earnings per share growth of 7%-8% annually from 2026 to 2030, with acceleration expected starting in 2028 [9][21] Business Line Data and Key Metrics Changes - Adjusted earnings from the energy infrastructure segment increased by $0.10 in 2025 due to higher production tax credits from additional solar generation projects [17] - Retail electric deliveries in Wisconsin, excluding the Iron Ore Mine, increased by 1.1% year-over-year in 2025, with projections for a 1.6% increase in 2026 [16] Market Data and Key Metrics Changes - The company is projecting a total of 3.9 gigawatts of electric demand growth in the I-94 corridor and north of Milwaukee over the next five years [8][9] - The capital plan has been updated to $37.5 billion over the next five years to meet the growing energy needs in the region [9][21] Company Strategy and Development Direction - The company is focused on executing its capital plan, which includes $7.4 billion in modern natural gas generation and LNG storage investments [9][10] - The company plans to invest $12.6 billion in renewable energy projects over the next five years, adding 6,500 MW to its generation fleet [10] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong economic growth in the region, driven by significant investments from companies like Microsoft and Vantage Data Centers [4][5] - The company is confident in its ability to execute its capital plan and continue its growth trajectory, with a focus on providing value for customers and shareholders [21] Other Important Information - The board increased the dividend by 6.7% to an annualized $3.81 per share, marking the 23rd consecutive year of dividend increases [20] - A proposed settlement in Illinois is expected to resolve approximately $2.3 billion of open dockets, including a $130 million rate-based reduction [12][13] Q&A Session Summary Question: Can you elaborate on the 500 megawatts related to Microsoft? - Management indicated that Microsoft is expanding its data center operations, which will add 500 MW of customer demand, contributing to the overall growth forecast [24][30] Question: Are there additional interests from other hyperscaler customers? - Management expressed confidence that other hyperscalers are looking at opportunities in Wisconsin, despite some local opposition [41][43] Question: What is the status of the very large customer tariff? - Management stated that the tariff is designed to ensure large customers pay their fair share and is currently under review by the Public Service Commission [53] Question: How does the Microsoft ramp impact customer rates? - Management noted that as data centers grow, they will help spread corporate allocations across a larger rate base, potentially benefiting other customers in the long term [72][91] Question: What is the outlook for the Point Beach negotiations? - Management confirmed ongoing discussions with NextEra regarding the Point Beach PPA, with potential upside expected in future planning [31][82]

Financial Data and Key Metrics Changes - Consolidated freight revenue increased by 7.8% or approximately $19.5 million to $270.6 million [6] - Consolidated adjusted operating income shrank by 39.4% to $10.9 million due to margin compression in several segments [7] - Net indebtedness increased by $76.9 million to $296.6 million, yielding an adjusted leverage ratio of approximately 2.3 times and a debt-to-capital ratio of 42.3% [7] - Average age of tractors increased to 24 months from 20 months year-over-year [8] - Adjusted return on average invested capital was 5.6% compared to 8.1% in the prior year [8] Business Segment Data and Key Metrics Changes - The expedited segment reported an adjusted operating ratio of 97.2%, which did not meet expectations due to external challenges including a U.S. government shutdown [8] - Dedicated segment achieved a 92.2 adjusted operating ratio, the best for any quarter during the year, with a fleet growth of 90 average tractors or approximately 6.3% [9] - Managed freight saw significant revenue improvement due to the Star Logistics Solutions acquisition, but margins were compressed due to rising costs [10] - Warehousing segment experienced a 4.6% increase in freight revenue but a decline in adjusted operating income due to startup costs and operational inefficiencies [11] Market Data and Key Metrics Changes - The freight market is evolving towards equilibrium, with spot rates rising meaningfully and increased bid activity from shippers [3] - Bids in January were up 33% compared to the fourth quarter, indicating heightened interest from shippers [23] - Concerns about capacity and increased cargo theft have influenced shippers' demand for high-value programs [24] Company Strategy and Development Direction - The company aims to reduce balance sheet leverage and improve return on capital through fleet optimization and targeted rate increases [5] - Focus on growing high-service niches within the dedicated segment while reducing exposure to commoditized freight [9] - The acquisition of Star Logistics Solutions is expected to be accretive to earnings in the first half of 2026, diversifying the business mix [6] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about improving freight fundamentals and the ability to capture operating leverage in 2026 [12] - The first quarter is expected to be impacted by seasonality and extreme weather, but improvements are anticipated later in the year [12] - Management highlighted the importance of rate increases to improve margins and expressed optimism about ongoing conversations with customers [16][54] Other Important Information - The company has deferred some trades and moved a group of assets to held-for-sale status to improve operations and balance sheet [4] - The strategic focus for 2026 includes integrating the Star acquisition and preparing for new business opportunities [34] Q&A Session Summary Question: What are the expectations for price increases in the expedited segment? - Management indicated that the average price increase is around 3.5% for the first three weeks of January, with optimism about ongoing conversations with customers [15][16] Question: How is the warehousing segment performing? - Revenue is up, but profit is down due to startup costs; management expects improvement in the coming quarters [25][30] Question: What is the outlook for managed freight revenue? - Revenue is expected to be flat to up on a sequential basis, with growth anticipated in the third and fourth quarters [64] Question: How will the company respond to potential demand recovery in 2026? - The strategy will focus on reclaiming profits lost over the past four years and ensuring rates are acceptable before increasing capacity [95][96] Question: What percentage of the customer book renews in each quarter? - Approximately 40% of customers renew in the second quarter, with 60% expected to take multiple rate increases [99][100]

Financial Data and Key Metrics Changes - Consolidated freight revenue increased by 7.8% or approximately $19.5 million to $270.6 million [7] - Consolidated adjusted operating income shrank by 39.4% to $10.9 million due to margin compression in several segments [8] - Net indebtedness increased by $76.9 million to $296.6 million, yielding an adjusted leverage ratio of approximately 2.3 times and a debt-to-capital ratio of 42.3% [8] - Average age of tractors increased to 24 months from 20 months year-over-year [9] - Adjusted return on average invested capital was 5.6% compared to 8.1% in the prior year [9] Business Line Data and Key Metrics Changes - The expedited segment reported an adjusted operating ratio of 97.2%, which did not meet expectations due to external challenges including a U.S. government shutdown [9][10] - The dedicated segment achieved a 92.2 adjusted operating ratio, the best for any quarter during the year, with a fleet growth of 90 average tractors or approximately 6.3% [10] - Managed freight saw significant revenue improvement due to the Star Logistics Solutions acquisition, but margins were compressed due to rising costs [11] - The warehousing segment experienced a 4.6% increase in freight revenue but a decline in adjusted operating income due to startup costs and operational inefficiencies [12] Market Data and Key Metrics Changes - The freight market is evolving towards equilibrium, with spot rates rising meaningfully and increased bid activity from shippers [3] - Bids in January were up 33% compared to the fourth quarter, indicating heightened interest from shippers [25] - Concerns about capacity and cargo theft have increased, influencing shippers' demand for high-value programs [26] Company Strategy and Development Direction - The company aims to reduce balance sheet leverage and improve return on capital through fleet optimization and targeted rate increases [5][10] - A small acquisition of a truckload brokerage company, Star Logistics Solutions, is expected to be accretive to earnings in the first half of 2026 [7] - The focus will be on growing high-service niches within the dedicated segment while reducing exposure to commoditized freight [11] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about improving freight fundamentals and the ability to capture operating leverage in 2026 [14] - The first quarter is expected to be impacted by seasonality and extreme weather, but improvements are anticipated later in the year [14] - Management highlighted the importance of executing their strategy effectively in 2026, focusing on integration and capital allocation [37] Other Important Information - The company has deferred some trades and moved a group of assets to held-for-sale status due to declining used equipment values [4] - The acquisition of Star Logistics Solutions is aimed at diversifying the business mix and enhancing profitability [7] Q&A Session Summary Question: Price increases in the expedited segment - Management indicated that the average price increase is around 3.5% for the first three weeks of January, with positive momentum in conversations with customers [17][18] Question: Expectations for warehousing revenue and bookings - Management expects improvement in warehousing revenue in Q1 compared to Q4, with a commitment to driving organic growth [30][31] Question: Impact of government shutdown on expedited segment - Management confirmed that the government shutdown significantly impacted the expedited segment's performance [49] Question: Future margin expectations for expedited and dedicated segments - Management aims for expedited margins in the 80s and dedicated margins in the high 80s to 90s over the long term [73] Question: Flexibility in responding to improved demand - Management plans to reclaim profits lost over the past four years and focus on rate increases rather than adding excessive capacity [94]

Core Viewpoint - BNSF Railway has announced a $3.6 billion capital plan for 2026, primarily focused on infrastructure maintenance and modernization to meet customer needs and support growth [1][2]. Infrastructure Maintenance - The majority of the capital plan, amounting to $2.8 billion, is allocated for infrastructure maintenance, which includes replacing 400 miles of rail and over 2.5 million ties, as well as approximately 13,000 miles of track surfacing [1][2]. Expansion and Efficiency Projects - An additional $358 million is designated for expansion and efficiency projects, which encompasses property acquisitions and development for the $1.5 billion Barstow International Gateway project and the $3.2 billion Logistics Park Phoenix, the latter facing zoning challenges [3]. - Other projects include yard expansions in Galesburg, Illinois, and Winslow, Arizona [3].

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