Talen Energy — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported GAAP Net Income Attributable to Stockholders of $138 million for the quarter ended September 30, 2026, a decrease of $69 million compared to $207 million in the same period in 2025.
• Reported Adjusted EBITDA of $669 million for the quarter, an increase of $306 million compared to $363 million in the prior year period.
• Reported Adjusted Free Cash Flow of $433 million for the quarter, an increase of $210 million compared to $223 million in the prior year period.
• For the nine months ended September 30, 2026, GAAP Net Income was $109 million compared to $144 million in 2025.
• For the nine months ended September 30, 2026, Adjusted EBITDA was $1,516 million compared to $653 million in 2025.
• For the nine months ended September 30, 2026, Adjusted Free Cash Flow was $995 million compared to $232 million in 2025.
• Total generation for the quarter was 23.9 TWh compared to 11.1 TWh in 2025; capacity factor was 75.4% compared to 56.6% in 2025.
• Energy and other revenues were $1,187 million for the quarter compared to $604 million in 2025; capacity revenues were $323 million compared to $166 million in 2025.
• Unrealized losses on commodity derivative instruments were $183 million for the quarter compared to a gain of $42 million in 2025.
• Interest expense and other finance charges were $148 million for the quarter compared to $67 million in 2025.
• As of September 30, 2026, total assets were $15,087 million and total liabilities were $13,484 million.
• Total Stockholders' Equity was $1,580 million as of September 30, 2026, compared to $1,093 million as of December 31, 2025.
• Net cash provided by operating activities for the nine months ended September 30, 2026, was $490 million compared to $424 million in 2025.
• Net cash used in investing activities for the nine months ended September 30, 2026, was $2,963 million, primarily driven by the Cornerstone Acquisition of $2,569 million.
• Net cash provided by financing activities for the nine months ended September 30, 2026, was $2,070 million, driven by debt issuances of $4,000 million and share repurchases of $502 million.

Guidance and Future Outlook:

• Reaffirmed 2026 Adjusted EBITDA guidance range of $2,050 million to $2,200 million.
• Reaffirmed 2026 Adjusted Free Cash Flow guidance range of $1,225 million to $1,325 million.
• Introduced 2027 Adjusted EBITDA guidance range of $2,500 million to $2,850 million.
• Introduced 2027 Adjusted Free Cash Flow guidance range of $1,500 million to $1,750 million.
• The 2027 guidance represents approximately 26% growth in Adjusted EBITDA and 27% growth in Adjusted Free Cash Flow at the midpoints compared to 2026 guidance.
• Management cited strong PJM fundamentals and a full year of contributions from recently acquired assets as drivers for the 2027 outlook.

Business Segments and Product Lines:

• The company owns and operates approximately 15.5 GW of power infrastructure, including 2.2 GW of nuclear power and a dispatchable fossil fleet.
• Generation and sales occur in the Mid-Atlantic, Ohio, Indiana, and Montana wholesale U.S. power markets.
• The company is positioning itself to serve the growing demand for reliable power from artificial intelligence data centers.
• Total generation volumes increased significantly in Q3 2026 compared to 2025, attributed to the contribution of acquired generation facilities.

Market and Competitive Landscape:

• Operating in the PJM market with strong fundamentals supporting the fleet's outlook.
• Growing demand across PJM strengthens the outlook for the company's fleet.
• The company focuses on delivering value per megawatt produced through safe and reliable power generation.

Risks and Challenges:

• GAAP Net Income was negatively impacted by unrealized mark-to-market losses on commodity derivative contracts.
• Higher interest expense associated with acquisition financings reduced GAAP Net Income.
• Forward-looking statements are subject to substantial risks and uncertainties, including regulatory matters, hedging, liquidity, and capital resources.
• Actual results may differ materially from expectations due to factors such as the timing and size of the capacity monetization, ASR, and remaining SRP.

Management Commentary and Tone:

• CEO Mac McFarland stated the company delivered $669 million of Adjusted EBITDA and $433 million of Adjusted Free Cash Flow, reaffirming the midpoint and narrowing the range of 2026 guidance.
• President Terry Nutt noted that share repurchases remain the benchmark for capital allocation and that the company has repurchased more than one-third of shares outstanding at emergence.
• Management emphasized the objective of increasing Adjusted Free Cash Flow per share over the coming years.
• The hedging program is described as a key component of the risk policy, supporting cash flow stability while maintaining upside optionality.

Other Key Points:

• Announced a $1.5 billion Accelerated Share Repurchase (ASR) program expected to be complete by the end of Q1 2027.
• Upsized the existing Share Repurchase Program (SRP) to an aggregate capacity of $3.0 billion through December 31, 2028, including the ASR.
• On October 1, 2026, the company received and retired approximately 3.8 million shares under the ASR program, representing 80% of the $1.5 billion value.
• The ASR was funded by net proceeds of $1.3 billion from a capacity monetization agreement and cash on hand.
• On October 1, 2026, the company closed a capacity monetization agreement to sell rights to approximately $1.5 billion in future PJM capacity cash flows for the 2027/2028 and 2028/2029 capacity years.
• During Q3 2026, the company repurchased 600,000 shares for approximately $204 million, separate from the ASR program.
• Since the start of 2024, the company has repurchased approximately 19.5 million shares for a total of approximately $4.0 billion.
• Maintains a net leverage target of 3.5x net debt-to-Adjusted EBITDA.
• As of October 30, 2026, total available liquidity was approximately $1.6 billion, comprised of $220 million in unrestricted cash and $1.4 billion available under the Revolving Credit Facility.
• As of September 30, 2026, approximately 80% of expected generation volumes for October-December 2026, 70% for 2027, and 35% for 2028 were hedged.
• The company acquired Cornerstone, with net cash outflow of $2,569 million in the nine months ended September 30, 2026.