Talen Energy Corporation Q4 FY2025 earnings call

• Safety is top priority, recordable incident rate below industry average. - Fleet performance good with low equivalent force outage factor and increased generation. - Financial results exceed revised guidance due to acquisitions. - Liquidity over $2 billion available. - Operational metrics and financial performance discussed. - Hedging strategy focused on maintaining risk tolerances and capturing upside.

For the year ended 2025, adjusted EBITDA was $1.035 billion and adjusted free cash flow was $524 million. Operational metrics: recordable incident rate 0.55 (below industry average), fleet had 4.7% equivalent force outage factor, generated ~40 terawatt hours (10% more than 2024). Full year 2025 financial results higher than 2024 due to higher capacity prices, RMR revenues, AWS revenues ramp, freedom and currency acquisitions, and higher power prices net of hedges; offset by Susquehanna Unit 2 extended outage and no PTC in 2025. Q4 2025 adjusted EBITDA $382 million, adjusted free cash flow $292 million.

Reaffirmed 2026 adjusted EBITDA range $1.75 billion to $2.05 billion and adjusted free cash flow range $980 million to $1.18 billion. Cornerstone acquisition expected to create more than $4 in incremental annual impact on adjusted free cash flow per share upon closing, with potential upside in 2026. Focus on returning capital to shareholders through share repurchase program and evaluating accretive M&A opportunities. Aim to maintain long-term net leverage ratio below 3.5 times.

Q: Color on backstop auction, contract negotiations in PJM; A: Mac discusses RBA/RVP as procurement, backstop to provide supply relief, existing contracts ongoing.

Q: Upgrades/new builds in procurement; A: Working on new build opportunities across generation forms, 15-year contracts at right price make math work.

Q: Link between PPL load and generation contracting; A: PPL signing ESAs supports generation contracting, ESA first step in process.

Q: Upside potential to free cash flow per share, slide 11; A: Slide shows levers to increase free cash flow per share, 480 and 1 gigawatt examples shown.

Q: Cross currents in PA, existing vs new gen; A: Political focus on affordability and resource adequacy, RVP provides relief valve, existing contracts can continue, new gen needed eventually.

Q: Organic vs inorganic opportunities, land value; A: Active pipeline of opportunities, but commercially sensitive and not discussing specifics.

Q: Hyperscalers in DC, impact on market architecture; A: Hyperscalers' commitments unknown, PJM not based on incremental megawatt load paying for generation.

Q: Gas contracting, hyperscaler appetite; A: Contract structures dependent on counterparty, various structures explored.

Q: Signing gas with incumbent gen, supply chain; A: Can contract with existing assets, new build requires offtake agreement, EPC relationships considered.

Q: Hedge book, optionality; A: Pragmatic hedging strategy, intentional length in outer periods, adding hedges as market presents opportunities.

Q: Cornerstone acquisition, EBITDA allocation; A: Good round number for EBITDA contribution, timing dependent, more value in winter timeframe.

Q: Capital/balance sheet management, new build; A: Depends on structure, toggle between strategies based on highest returns, balance sheet managed for best use of capital