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Talen Energy Reports Third Quarter 2026 Results, Reaffirms 2026 Guidance, and Introduces 2027 Guidance

The 2027 outlook implies approximately 26% growth in adjusted EBITDA and 27% growth in adjusted free cash flow at guidance midpoints.

(Moderate)

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Rhea-AI Summary

Talen Energy (NASDAQ: TLN) reported third-quarter net income attributable to stockholders of $138 million, down from the prior-year quarter. Adjusted EBITDA rose to $669 million from $363 million, and adjusted free cash flow increased to $433 million from $223 million. These are non-GAAP measures of earnings and cash generation. GAAP net income fell from $207 million as unrealized commodity derivative losses and higher acquisition-financing interest outweighed operating gains.

Talen reaffirmed 2026 adjusted EBITDA guidance of $2,050–$2,200 million and adjusted free cash flow of $1,225–$1,325 million. For 2027, it projects $2,500–$2,850 million and $1,500–$1,750 million, respectively. Its expanded $3.0 billion buyback program includes a $1.5 billion accelerated repurchase expected to settle by the first quarter of 2027. The company sold rights to future PJM capacity cash flows to help fund that repurchase.

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20 points · 0 major

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1 major · 15 points

Hollow bars mark forward-looking points. How the balance works

Positive

  • Moderate pointThird-quarter adjusted EBITDA rose to $669 million from $363 million a year earlier.
  • Moderate pointThird-quarter adjusted free cash flow increased to $433 million from $223 million a year earlier.
  • Moderate point. Forward-looking: it has not happened yet and may not happen.2027 adjusted EBITDA guidance of $2,500–$2,850 million represents approximately 26% midpoint growth versus 2026 guidance.
  • Moderate point. Forward-looking: it has not happened yet and may not happen.2027 adjusted free cash flow guidance of $1,500–$1,750 million represents approximately 27% midpoint growth versus 2026 guidance.
  • Moderate pointBuyback authorization increased from $1.5 billion to $3.0 billion remaining capacity, through December 31, 2028.
  • Moderate point. Forward-looking: it has not happened yet and may not happen.Accelerated buyback of $1.5 billion delivered approximately 3.8 million retired shares; final settlement expected by first-quarter 2027. 9.5% of market cap
  • Moderate pointCapacity monetization closed October 1, providing $1.3 billion net proceeds used to fund the accelerated buyback. 8.3% of market cap
  • Moderate pointThird-quarter operating revenues increased to $1,327 million from $812 million a year earlier.
  • Moderate pointThird-quarter generation increased to 23.9 TWh from 11.1 TWh a year earlier.
  • Moderate pointThird-quarter capacity factor increased to 75.4% from 56.6% a year earlier.
  • Moderate pointNine-month adjusted free cash flow increased to $995 million from $232 million a year earlier.
  • Moderate pointNine-month operating income increased to $393 million from $223 million a year earlier.
  • Moderate pointNine-month operating cash flow increased to $490 million from $424 million a year earlier.
7 minor points
  • Minor point. Forward-looking: it has not happened yet and may not happen.2026 adjusted EBITDA guidance reaffirmed at $2,050–$2,200 million.
  • Minor point. Forward-looking: it has not happened yet and may not happen.2026 adjusted free cash flow guidance reaffirmed at $1,225–$1,325 million.
  • Minor pointSeparate third-quarter repurchases returned approximately $204 million through purchases of 600,000 shares, excluding transaction costs.
  • Minor pointNine-month adjusted EBITDA increased to $1,516 million from $653 million a year earlier.
  • Minor pointNine-month operating revenues increased to $3,203 million from $1,832 million a year earlier.
  • Minor pointNine-month generation increased to 53.5 TWh from 28.1 TWh a year earlier.
  • Minor pointNine-month capacity factor increased to 64.3% from 47.2% a year earlier.

Negative

  • Major pointCornerstone acquisition required a $2,569 million net cash outflow during the first nine months. 16% of market cap
  • Moderate pointThird-quarter GAAP net income fell to $138 million from $207 million a year earlier.
  • Moderate pointThird-quarter revenue-related unrealized derivative results shifted to a $183 million loss from a $42 million gain. 1.2% of market cap
  • Moderate pointThird-quarter interest expense and finance charges increased to $148 million from $67 million a year earlier.
  • Moderate pointCapacity monetization sold rights to approximately $1.5 billion of future cash flows for PJM years 2027/2028 and 2028/2029. 9.5% of market cap
  • Moderate pointLong-term debt increased to $9,540 million at September 30, 2026, from $6,782 million at December 31, 2025.
  • Moderate pointCash and equivalents declined to $335 million at September 30, 2026, from $689 million at December 31, 2025.
  • Moderate pointCash settlement of stock-based awards required $500 million during the first nine months, versus none a year earlier. 3.2% of market cap
7 minor points
  • Minor pointThird-quarter diluted earnings per share fell to $2.88 from $4.25 a year earlier.
  • Minor pointThird-quarter operating income declined to $255 million from $263 million a year earlier.
  • Minor pointNine-month GAAP net income declined to $109 million from $144 million a year earlier.
  • Minor pointNine-month diluted earnings per share declined to $2.33 from $2.96 a year earlier.
  • Minor pointNine-month interest expense and finance charges increased to $481 million from $203 million a year earlier.
  • Minor pointNine-month property, plant and equipment spending increased to $348 million from $72 million a year earlier.
  • Minor pointTax payments related to net-settled stock awards required $141 million during the first nine months.

Key Figures

GAAP net income attributable to stockholders: $138 million Adjusted EBITDA: $669 million Adjusted Free Cash Flow: $433 million +5 more
GAAP net income attributable to stockholders
$138 million
Third quarter 2026; decreased $69 million year over year
Adjusted EBITDA
$669 million
Third quarter 2026; increased $306 million year over year
Adjusted Free Cash Flow
$433 million
Third quarter 2026; increased $210 million year over year
2026 Adjusted EBITDA guidance
$2,050 million–$2,200 million
2026 guidance reaffirmed
2026 Adjusted Free Cash Flow guidance
$1,225 million–$1,325 million
2026 guidance reaffirmed
2027 Adjusted EBITDA guidance
$2,500 million–$2,850 million
Newly introduced 2027 guidance
2027 Adjusted Free Cash Flow guidance
$1,500 million–$1,750 million
Newly introduced 2027 guidance
Share repurchase program
$3.0 billion
Through December 31, 2028; includes the accelerated share repurchase program

Previous Earnings Reports

2 past events · Latest: Aug 05
Same Type 2 events
  1. Aug 05

    Q2 earnings

    24h Move
    +2.6%

    Adjusted EBITDA and free cash flow rose year over year, and Talen raised 2026 guidance.

  2. May 05

    Q1 earnings

    24h Move
    +6.5%

    Talen reaffirmed 2026 guidance while reporting first-quarter results and announcing a PJM plant acquisition.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

accelerated share repurchase, mark-to-market, capacity factor, gaap
4 terms
accelerated share repurchase financial
"Announced $1.5 billion accelerated share repurchase program"
An accelerated share repurchase is a deal where a company hires a bank to buy back a large block of its own stock immediately on the open market, with the bank later settling the exact number of shares over time. For investors it matters because the immediate reduction in shares outstanding can raise per‑share earnings and often supports the stock price, but it also uses company cash or borrowing and can change liquidity and future growth funding.
mark-to-market financial
"unrealized mark-to-market losses on commodity derivative contracts"
"Mark-to-market" is a method of valuing assets or investments based on their current market price, rather than their original cost or value. It helps investors see the most up-to-date worth of their holdings, much like checking the latest price of a stock before deciding to buy or sell. This approach ensures that financial statements reflect real-time value, providing a clearer picture of overall financial health.
capacity factor technical
"Capacity Factor"
Capacity factor is the percentage of time a power plant or energy asset actually produces electricity compared with the maximum it could produce if it ran at full output continuously. For investors it shows how much revenue and value to expect from the asset — like judging a car by how often it’s driven near top speed rather than its top speed alone — and helps compare different technologies, project reliability, and cash‑flow forecasts.
gaap financial
"Third quarter GAAP Net Income (Loss) Attributable to Stockholders"
GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.
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Earnings Release Highlights

  • Third quarter GAAP Net Income (Loss) Attributable to Stockholders of $138 million.
  • Third quarter Adjusted EBITDA of $669 million and Adjusted Free Cash Flow of $433 million.
  • Announced $1.5 billion accelerated share repurchase program (“ASR”) expected to be complete by the end of the first quarter 2027. Upsized share repurchase program (“SRP”) to $3.0 billion through December 31, 2028 (including the ASR).
  • Reaffirming 2026 Adjusted EBITDA and Adjusted Free Cash Flow guidance ranges to $2,050 million - $2,200 million and $1,225 million - $1,325 million, respectively.
  • Introducing 2027 Adjusted EBITDA and Adjusted Free Cash Flow guidance ranges of $2,500 million - $2,850 million and $1,500 million - $1,750 million, representing approximately 26% and 27% growth at the midpoints compared with 2026 guidance.

HOUSTON, Nov. 03, 2026 (GLOBE NEWSWIRE) -- Talen Energy Corporation (“Talen,” “TEC,” the “Company,” “we,” or “our”) (NASDAQ: TLN), a leading independent power producer, today reported its third quarter 2026 financial results and other highlights.

“Talen delivered $669 million of Adjusted EBITDA and $433 million of Adjusted Free Cash Flow in the third quarter. With nine months behind us, we are reaffirming the midpoint and are narrowing the range of our 2026 guidance. We are also introducing our 2027 guidance that reflects strong PJM fundamentals and a full year of contributions from our recently acquired assets,” said Talen Chief Executive Officer Mac McFarland.

Talen President Terry Nutt added, “Share repurchases remain the benchmark against which we evaluate capital allocation. This quarter, we increased our share repurchase program to $3.0 billion, including a $1.5 billion accelerated share repurchase program. We have now repurchased more than one third of the shares outstanding at emergence.” He continued, “Growing demand across PJM strengthens the outlook for our fleet and supports our focus on increasing Adjusted Free Cash Flow per share over the coming years.”

Operating Results (Unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,
(Millions of Dollars Unless Otherwise Stated)  2026   2025   2026   2025 
GAAP Net Income (Loss) Attributable to Stockholders $138  $207  $109  $144 
Adjusted EBITDA  669   363   1,516   653 
Adjusted Free Cash Flow  433   223   995   232 
Total Generation (TWh)(a)  23.9   11.1   53.5   28.1 
Capacity Factor  75.4%  56.6%  64.3%  47.2%

__________________
(a) Total generation is net of station use consumption, where applicable. Volumes associated with acquired and sold generation facilities are presented for the periods in which Talen owned the facilities.

For the quarter ended September 30, 2026, Talen reported GAAP Net Income (Loss) Attributable to Stockholders of $138 million, Adjusted EBITDA of $669 million, and Adjusted Free Cash Flow of $433 million. Compared with the quarter ended September 30, 2025:

  • GAAP Net Income (Loss) Attributable to Stockholders decreased by $(69) million primarily due to higher net income associated with the contribution of acquired generation facilities, higher settled power prices and generation volumes (net of realized hedges), and higher capacity revenues. Such amounts were outweighed by unrealized mark-to-market losses on commodity derivative contracts and an increase in interest expense associated with acquisition financings.
  • Adjusted EBITDA increased by $306 million primarily due to the contribution of acquired generation facilities, higher settled power prices and generation volumes (net of realized hedges), and higher capacity revenues.
  • Adjusted Free Cash Flow increased by $210 million primarily due to the contribution of acquired generation facilities, higher settled power prices and generation volumes (net of realized hedges), and higher capacity revenues, which were partially offset by higher cash interest payments associated with acquisition financings.

See “Non-GAAP Financial Measures” for details and reconciliations of GAAP to non-GAAP financial measures.

Reaffirming 2026 Guidance and Introducing 2027 Guidance

(Millions of Dollars) 2026E 2027E
Adjusted EBITDA $2,050 - $2,200 $2,500 - $2,850
Adjusted Free Cash Flow $1,225 - $1,325 $1,500 - $1,750


Upsize of SRP and ASR

In September 2026, the Board of Directors approved the upsizing of the Company’s existing SRP from $1.5 billion to an aggregate remaining capacity of $3.0 billion. Additionally, the Company entered into an ASR program, authorized under the SRP, to repurchase an aggregate of $1.5 billion of TEC common stock.

On October 1, 2026, the Company received and retired approximately 3.8 million shares of TEC common stock repurchased under the ASR program, which is equivalent to 80% of the aggregate $1.5 billion value of the ASR program. The final settlement is expected to be completed no later than the first quarter of 2027. The repurchases were funded by net proceeds of $1.3 billion from the capacity monetization and cash on hand.

During the third quarter 2026, we repurchased 600,000 shares of TEC common stock for approximately $204 million, separate from the ASR program. Upon completion of the ASR program at current prices, we will have repurchased approximately 19.5 million shares of TEC common stock for a total of approximately $4.0 billion since the start of 2024, with $1.5 billion remaining under our SRP through year end 2028. All share repurchase amounts exclude transaction costs.

PJM Capacity Monetization

On October 1, 2026, Talen closed on 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 PJM capacity years and used the net proceeds of $1.3 billion to fund the ASR.

Balance Sheet and Liquidity

We are focused on maintaining our net leverage target of 3.5x net debt-to-Adjusted EBITDA. As of October 30, 2026, Talen had total available liquidity of approximately $1.6 billion, comprised of $220 million of unrestricted cash and $1.4 billion of available capacity under the Revolving Credit Facility.

Update on Hedging Activities

As of September 30, 2026, including the impact of the Nuclear Production Tax Credit, we had hedged approximately 80% of our expected generation volumes for October - December 2026, approximately 70% for 2027 and approximately 35% for 2028. Talen’s hedging program is a key component of our comprehensive risk policy and supports the objective of increasing cash flow stability while maintaining upside optionality.

Earnings Call

Talen will hold an earnings call on Tuesday, November 3, 2026, at 8 a.m. ET (7 a.m. CT). To listen to the earnings call, please register in advance for the webcast here. For participants joining the call via phone, please register here prior to the start time to receive dial-in information. A digital replay will be archived for approximately one year and available on the Events page of Talen’s Investor Relations website linked here.

About Talen

Talen Energy (NASDAQ: TLN) is a leading independent power producer and energy infrastructure company dedicated to powering the future. We own and operate approximately 15.5 GW of power infrastructure in the United States, including 2.2 GW of nuclear power and a significant dispatchable fossil fleet. We produce and sell electricity, capacity, and ancillary services into wholesale U.S. power markets, with generation in the Mid-Atlantic, Ohio, Indiana, and Montana. Our team is committed to generating power safely and reliably and delivering the most value per megawatt produced. Talen is also powering the digital infrastructure revolution. We are well-positioned to serve this growing industry, as artificial intelligence data centers increasingly demand more reliable power. Talen is headquartered in Houston, Texas. For more information, visit https://www.talenenergy.com/.

Investor Relations:

Bill Appicelli
Senior Vice President, Investor Relations
InvestorRelations@talenenergy.com

Media:

Taryne Williams
Director, Corporate Communications
Taryne.Williams@talenenergy.com

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this communication, or incorporated by reference into this communication, are forward-looking statements. Throughout this communication, we have attempted to identify forward-looking statements by using words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecasts," "goal," "intend," "may," "plan," "potential," "predict," "project," "seek," "should," "will," or other forms of these words or similar words or expressions or the negative thereof, although not all forward-looking statements contain these terms. Forward-looking statements address future events and conditions concerning, among other things, the leadership transition, the timing, size, completion, and impacts of the capacity monetization, ASR, and remaining SRP, capital expenditures, earnings, litigation, regulatory matters, hedging, liquidity and capital resources, accounting matters, expectations, beliefs, plans, objectives, goals, strategies, future events or performance, shareholder returns and underlying assumptions. Forward-looking statements are subject to substantial risks and uncertainties that could cause our future business, financial condition, results of operations or performance to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this communication. All of our forward-looking statements include assumptions underlying or relating to such statements that may cause actual results to differ materially from expectations and are subject to numerous factors that present considerable risks and uncertainties.


TALEN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
  Three Months Ended September 30, Nine Months Ended September 30,
(Millions of Dollars, except share data)  2026   2025   2026   2025 
Energy and other revenues $1,187  $604  $2,943  $1,552 
Capacity revenues  323   166   767   303 
Unrealized gain (loss) on derivative instruments  (183)  42   (507)  (23)
Operating Revenues  1,327   812   3,203   1,832 
Fuel and energy purchases  (626)  (259)  (1,546)  (677)
Nuclear fuel amortization  (27)  (27)  (73)  (71)
Unrealized gain (loss) on derivative instruments  (7)  (6)  (48)  (31)
Energy Expenses  (660)  (292)  (1,667)  (779)
Operating Expenses        
Operation, maintenance and development  (167)  (131)  (542)  (469)
General and administrative (Includes stock-based compensation of $(51), $(15), $(120) and $(42))  (76)  (38)  (198)  (113)
Depreciation, amortization and accretion  (157)  (61)  (352)  (205)
Other operating income (expense), net  (12)  (27)  (51)  (43)
Operating Income (Loss)  255   263   393   223 
Nuclear decommissioning trust funds gain (loss), net  18   81   130   149 
Interest expense and other finance charges  (148)  (67)  (481)  (203)
Gain (loss) on sale of assets, net  66   25   69   36 
Other non-operating income (expense), net  4   2   36   9 
Income (Loss) Before Income Taxes  195   304   147   214 
Income tax benefit (expense)  (57)  (97)  (38)  (70)
Net Income (Loss) Attributable to Stockholders $138  $207  $109  $144 
Per Common Share        
Net Income (Loss) Attributable to Stockholders - Basic $2.90  $4.52  $2.35  $3.15 
Net Income (Loss) Attributable to Stockholders - Diluted $2.88  $4.25  $2.33  $2.96 
Weighted-Average Number of Common Shares Outstanding - Basic (in thousands)  47,625   45,684   46,388   45,694 
Weighted-Average Number of Common Shares Outstanding - Diluted (in thousands)  47,973   48,582   46,757   48,588 
                 


TALEN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Millions of Dollars, except share data) September 30,
2026
 December 31,
2025
Assets    
Cash and cash equivalents $335  $689 
Restricted cash and cash equivalents  14   63 
Accounts receivable  304   196 
Inventory, net  316   278 
Derivative instruments  122   56 
Other current assets  61   67 
Total current assets  1,152   1,349 
Property, plant and equipment, net  11,858   7,546 
Nuclear decommissioning trust funds  1,976   1,900 
Derivative instruments  9   4 
Other noncurrent assets  92   106 
Total Assets $15,087  $10,905 
Liabilities and Equity    
Long-term debt, due within one year $29  $29 
Accrued interest  169   60 
Accounts payable and other accrued liabilities  391   281 
Derivative instruments  617   101 
Stock-based compensation liabilities  2   501 
Other current liabilities  82   78 
Total current liabilities  1,290   1,050 
Long-term debt  9,540   6,782 
Derivative instruments  243   67 
Postretirement benefit obligations  203   229 
Asset retirement obligations and accrued environmental costs  500   494 
Deferred income taxes  938   486 
Acquired contract liabilities  734   662 
Other noncurrent liabilities  36   42 
Total Liabilities $13,484  $9,812 
Commitments and Contingencies    
Stockholders' Equity    
Common stock ($0.001 par value, 350,000,000 shares authorized)(a) $—  $— 
Additional paid-in capital  2,562   1,709 
Accumulated retained earnings (deficit)  (947)  (612)
Accumulated other comprehensive income (loss)  (35)  (4)
Total Stockholders' Equity  1,580   1,093 
Noncontrolling interests  23   — 
Total Equity  1,603   1,093 
Total Liabilities and Stockholders' Equity $15,087  $10,905 

__________________
(a) 47,316,772 and 45,687,828 shares issued and outstanding as of September 30, 2026 and December 31, 2025, respectively.


TALEN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
  Nine Months Ended September 30,
(Millions of Dollars)  2026   2025 
Operating Activities    
Net Income (Loss) $109  $144 
Non-cash reconciliation adjustments:    
Unrealized (gains) losses on derivative instruments  535   68 
Depreciation, amortization and accretion  285   208 
Nuclear decommissioning trust funds (gain) loss, net (excluding interest and fees)  (88)  (112)
Nuclear fuel amortization  73   71 
Deferred income taxes  14   44 
Stock-based compensation  120   42 
(Gain) loss on sales of assets, net  (66)  (36)
Other  30   38 
Changes in assets and liabilities:    
Accounts receivable  (70)  (57)
Inventory, net  (14)  35 
Other assets  23   202 
Accounts payable and accrued liabilities  61   (91)
Accrued interest  109   36 
Collateral received (posted), net  (68)  (7)
Cash settlement of stock-based awards  (500)  — 
Other liabilities  (63)  (161)
Net cash provided by (used in) operating activities  490   424 
Investing Activities    
Property, plant and equipment expenditures  (348)  (72)
Nuclear fuel expenditures  (101)  (94)
Nuclear decommissioning trust funds investment purchases  (564)  (1,852)
Nuclear decommissioning trust funds investment sale proceeds  530   1,827 
Cornerstone Acquisition, net  (2,569)  — 
Proceeds from the sale of assets  73   40 
Other  16   (5)
Net cash provided by (used in) investing activities  (2,963)  (156)
Financing Activities    
Debt issuances  4,000   — 
Debt repayments  (1,222)  (13)
Deferred financing costs  (59)  (29)
Revolving credit facility borrowings  500   75 
Revolving credit facility repayments  (500)  (75)
Share repurchases  (502)  (103)
Tax payments related to net-settled stock-based awards  (141)  — 
Other  (6)  9 
Net cash provided by (used in) financing activities  2,070   (136)
Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents  (403)  132 
Beginning of period cash and cash equivalents and restricted cash and cash equivalents  752   365 
End of period cash and cash equivalents and restricted cash and cash equivalents $349  $497 
         

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted Free Cash Flow, which we use as measures of our performance and liquidity, are not financial measures prepared under GAAP. Non-GAAP financial measures do not have definitions under GAAP and may be defined and calculated differently by, and not be comparable to, similarly titled measures used by other companies. Non-GAAP measures are not intended to replace the most comparable GAAP measures as indicators of performance. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Management cautions readers not to place undue reliance on the following non-GAAP financial measures, but to also consider them along with their most directly comparable GAAP financial measures. Non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP.

Adjusted EBITDA

We use Adjusted EBITDA to: (i) assist in comparing operating performance and readily view operating trends on a consistent basis from period to period without certain items that may distort financial results; (ii) plan and forecast overall expectations and evaluate actual results against such expectations; (iii) communicate with our Board of Directors, shareholders, creditors, analysts, and the broader financial community concerning our financial performance; (iv) set performance metrics for our annual short-term incentive compensation; and (v) assess compliance with our indebtedness.

Adjusted EBITDA is computed as net income (loss) adjusted, among other things, for certain: (i) nonrecurring charges; (ii) non-recurring gains; (iii) non-cash and other items; (iv) unusual market events; (v) any depreciation, amortization, or accretion; (vi) mark-to-market gains or losses; (vii) gains and losses on the nuclear facility decommissioning trust (“NDT”); (viii) gains and losses on asset sales, dispositions, and asset retirement; (ix) impairments, obsolescence, and net realizable value charges; (x) interest expense; (xi) income taxes; (xii) legal settlements, liquidated damages, and contractual terminations; (xiii) development expenses; (xiv) noncontrolling interests, except where otherwise noted; and (xv) other adjustments. Such adjustments are computed consistently with the provisions of our indebtedness to the extent that they can be derived from the financial records of the business.

Additionally, we believe investors commonly adjust net income (loss) information to eliminate the effect of nonrecurring restructuring expenses and other non-cash charges, which can vary widely from company to company and from period to period and impair comparability. We believe Adjusted EBITDA is useful to investors and other users of our financial statements to evaluate our operating performance because it provides an additional tool to compare business performance across companies and between periods. Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to such items described above. These adjustments can vary substantially from company to company and period to period depending upon accounting policies, book value of assets, capital structure, and the method by which assets were acquired.

Adjusted Free Cash Flow

Adjusted Free Cash Flow is utilized by our chief operating decision makers to evaluate cash flow activities. Adjusted Free Cash Flow is computed as Adjusted EBITDA reduced by capital expenditures (including nuclear fuel but excluding development, growth, and (or) conversion capital expenditures), cash payments for interest and finance charges, cash payments for income taxes (excluding income taxes paid from the NDT, taxes paid or deductions taken as a result of strategic asset sales, and benefits of the Nuclear PTC utilized to reduce income taxes paid), and pension contributions.

We believe Adjusted Free Cash Flow is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to determine a company’s ability to meet future obligations and to compare business performance across companies and across periods. Adjusted Free Cash Flow is widely used by investors to measure a company’s levered cash flow without regard to items such as ARO settlements; nonrecurring development, growth and conversion expenditures; and cash proceeds or payments for the sale or purchase of assets, which can vary substantially from company to company and from period to period depending upon accounting methods, book value of assets, capital structure, and the method by which assets were acquired.

Adjusted EBITDA / Adjusted Free Cash Flow Reconciliation

The following table presents a reconciliation of the GAAP financial measure of “Net Income (Loss)” presented on the Consolidated Statements of Operations to the non-GAAP financial measures of Adjusted EBITDA and Adjusted Free Cash Flow:

  Three Months Ended September 30, Nine Months Ended September 30,
(Millions of Dollars)  2026   2025   2026   2025 
Net Income (Loss) $138  $207  $109  $144 
Adjustments        
Interest expense and other finance charges  148   67   481   203 
Income tax (benefit) expense  57   97   38   70 
Depreciation, amortization and accretion(a)  122   61   273   198 
Nuclear fuel amortization(a)  27   27   73   71 
Unrealized (gain) loss on commodity derivative contracts  190   (36)  555   54 
Nuclear decommissioning trust funds (gain) loss, net  (18)  (81)  (130)  (149)
Stock-based and other long-term incentive compensation expense  54   18   127   49 
(Gain) loss on asset sales, net  (66)  (25)  (69)  (36)
Non-cash impairments and other charges  1   1   2   11 
Acquisition and divestiture activities(b)  2   8   39   12 
Operational and other restructuring activities  4   3   11   6 
Other  10   16   7   20 
Total Adjusted EBITDA $669  $363  $1,516  $653 
Capital expenditures, net  (77)  (65)  (200)  (164)
Interest and finance charge payments  (149)  (36)  (303)  (143)
Income taxes  (1)  —   5   (51)
Pension contributions  (9)  (39)  (23)  (63)
Total Adjusted Free Cash Flow $433  $223  $995  $232 

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(a) Includes the periodic amortization of fair value adjustments associated with acquired fuel supply contract liabilities and intangible assets.
(b) Includes the non-recurring: (i) advisory fees associated with completed acquisitions and divestitures; (ii) remaining settlements on contracts of divested assets; and (iii) non-recurring finance fees charged to the Consolidated Statement of Operations associated with acquisition financing fee arrangements.


Adjusted EBITDA / Adjusted Free Cash Flow Reconciliation: 2026E and 2027E Guidance

  2026E 2027E
(Millions of Dollars) Low High Low High
Net Income (Loss) $960  $1,080  $1,105  $1,405 
Adjustments        
Interest expense and other finance charges  460   480   585   615 
Income tax (benefit) expense  15   25   50   70 
Depreciation, amortization and accretion  515   515   650   650 
Nuclear fuel amortization  100   100   110   110 
Adjusted EBITDA $2,050  $2,200  $2,500  $2,850 
Capital expenditures, net $(325) $(335) $(355) $(385)
Interest and finance charge payments  (460)  (480)  (585)  (615)
Income taxes  (15)  (25)  (50)  (70)
Pension contributions  (25)  (35)  (10)  (30)
Adjusted Free Cash Flow $1,225  $1,325  $1,500  $1,750 

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Note: Figures are rounded to the nearest $5 million.


FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What is Talen Energy's 2027 earnings and cash flow guidance?

Talen projects 2027 adjusted EBITDA of $2,500–$2,850 million and adjusted free cash flow of $1,500–$1,750 million. The company expects a full year of contributions from recently acquired assets and cites PJM market fundamentals in its outlook.

How much stock is Talen Energy buying back?

Talen expanded its remaining repurchase authorization to $3.0 billion through December 31, 2028, including a $1.5 billion accelerated repurchase. Approximately 3.8 million shares were received and retired on October 1, 2026. Final settlement of the accelerated program is expected no later than the first quarter of 2027.

How much liquidity does Talen Energy have and what is its leverage target?

Talen had approximately $1.6 billion of available liquidity as of October 30, 2026, comprising $220 million of unrestricted cash and $1.4 billion of available revolving-credit capacity. Its target is 3.5 times net debt to adjusted EBITDA, a measure comparing debt net of cash with adjusted earnings.

How much of Talen Energy's expected generation is hedged?

As of September 30, 2026, Talen had hedged approximately 80% of expected generation for October–December 2026, approximately 70% for 2027 and approximately 35% for 2028, including the Nuclear Production Tax Credit's impact. Hedging locks in aspects of future pricing; the company uses it to support cash flow stability while retaining some upside exposure.

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