Talen Energy Corporation Q3 FY2025 earnings call

• Market Landscape: AI and data center capital budgets are expanding, driving power demand. Pennsylvania is a key area for data center development, and the company is addressing capacity and resource adequacy through various initiatives.
• Acquisitions: Working to close the Freedom and Guernsey acquisitions, with a refiled HSR application with the DOJ, and confidence in closing despite potential slip into Q1 2026. The company is also pursuing large load contracts and portfolio expansion.
• Financial Results: Q3 2025 saw $363 million adjusted EBITDA and $223 million adjusted free cash flow. Year-to-date, $653 million adjusted EBITDA and $232 million adjusted free cash flow were reported.
• Financing: Successfully closed a financing package, with $2.7 billion in senior unsecured notes and $1.2 billion senior secured term loan, and increased revolving credit facility to $900 million.

For the third quarter of 2025, Talen Energy reported $363 million of adjusted EBITDA and $223 million of adjusted free cash flow. For the nine months ended 2025, the company reported $653 million of adjusted EBITDA and $232 million of adjusted free cash flow. Liquidity remains substantial with $1.2 billion available for working capital, including ~$490 million in cash.

• 2025: Adjusted EBITDA is trending towards the low end of guidance due to Q3 market conditions and the extended Susquehanna outage. Adjusted free cash flow remains near the middle of the original range.
• 2026: Guidance is reaffirmed, with forwards ticking up, gas prices up, sparks expanding, and load strong. The company has a $2 billion share repurchase program remaining through year-end 2028, targeting $500 million annual repurchases post-acquisition.

• Regulatory Delays: Refiling HSR application with DOJ may cause a delay in closing the Freedom and Guernsey acquisitions, potentially bleeding into Q1 2026.
• Market Volatility: Uncertainty in power market conditions, including weather and load growth, can impact financial results.

Q: Concerned about existing assets losing time to power benefit to new builds?

A: Not concerned, focused on own execution, commercial knowledge, and speed to market. Things take time, but the company is making progress with initiatives like Montour rezoning.

Q: Thoughts on energy prices moving up?

A: Driven by increasing demand, energy prices should go up. However, still far from levels to support new CCGT builds. Energy prices need to rise to levels that support new generation investments.

Q: Battery storage partnership with EOS?

A: Working with EOS for long-duration storage, beneficial for load management and fire protection. EOS technology has advantages in fire protection and time duration matching with energy demand