Talen Energy Corp.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 3 November 2026: press release. Guidance figures: 1 raised, 2 lowered, 1 narrowed, 5 new, 3 kept. The quarter’s numbers.

Key takeaways

Adjusted EBITDA rose to $669 million: Third quarter Adjusted EBITDA was $669 million against $363 million a year earlier. The company attributed the $306 million increase to acquired generation, higher settled prices and volumes, and higher capacity revenues. Source
Net income fell on derivative losses: GAAP net income attributable to stockholders was $138 million against $207 million. Management cited unrealized mark-to-market losses on commodity derivatives and higher acquisition-financing interest expense as the offsetting items. Source
Adjusted free cash flow rose to $433 million: Adjusted Free Cash Flow was $433 million against $223 million, an increase of $210 million. Higher cash interest payments on acquisition financings partly offset the gain. Source
Future PJM capacity cash flows monetized: On October 1, 2026, the company closed a deal to sell rights to about $1.5 billion of future PJM capacity cash flows for the 2027/2028 and 2028/2029 capacity years. Source
Interest expense rose on acquisition debt: Interest expense and other finance charges were $148 million against $67 million, which management tied to acquisition financings. Nine-month interest was $481 million against $203 million. Source
PJM demand growth cited for fleet: Terry Nutt said growing demand across PJM strengthens the position of the fleet and supports a focus on Adjusted Free Cash Flow per share over the coming years. Source
Accelerated buyback of $1.5 billion: The company announced a $1.5 billion accelerated share repurchase, expected to complete by the end of the first quarter 2027. On October 1 it received about 3.8 million shares, equal to 80% of the ASR value. Source
Repurchase program raised to $3.0 billion: The share repurchase program was upsized from $1.5 billion to $3.0 billion of remaining capacity through December 31, 2028, including the ASR. Source
2026 midpoints reaffirmed, ranges narrowed: After nine months, management kept the 2026 Adjusted EBITDA and Adjusted Free Cash Flow midpoints and narrowed both ranges. Source

“With nine months behind us, we are reaffirming the midpoint and are narrowing the range of our 2026 guidance.”
Mac McFarland, Talen Chief Executive Officer

Guidance

Area	Period	Figure	Against last quarter
Adjusted EBITDA Source	2026	$2,050 million - $2,200 million	Kept
Adjusted Free Cash Flow Source	2026	$1,225 million - $1,325 million	Kept
Net income Source	2026	$960 million - $1,080 million	Lowered from $1,010 million - $1,180 million
Capital expenditures, net Source	2026	$(325) - $(335) million	Lowered from $(330) - $(340) million
Adjusted EBITDA Source	2027	$2,500 million - $2,850 million	New
Adjusted Free Cash Flow Source	2027	$1,500 million - $1,750 million	New
Net income Source	2027	$1,105 million - $1,405 million	New
Capital expenditures, net Source	2027	$(355) - $(385) million	New
Share repurchase program Source	through December 31, 2028	$3.0 billion	Narrowed from $1.7 billion remaining through year end 2028
Accelerated share repurchase Source	through end of first quarter 2027	$1.5 billion	New
Hedged share of expected generation Source	2027	approximately 70%	Kept
Hedged share of expected generation Source	2028	approximately 35%	Raised from approximately 30%

What changed from last quarter

Guidance kept: 2026 Adjusted EBITDA and Adjusted Free Cash Flow midpoints kept; the ranges were narrowed from the prior quarter. Source
Guidance lowered: The 2026 GAAP net income range and the 2026 net capital expenditure range are lower than in the second quarter release. Source
Guidance raised: Share repurchase program upsized from $1.5 billion to $3.0 billion of aggregate remaining capacity. Source
New guidance: 2027 Adjusted EBITDA, Adjusted Free Cash Flow, net income and net capital expenditure guidance introduced. Source
New: Accelerated share repurchase program of $1.5 billion entered into, funded from the capacity monetization and cash on hand. Source
New: Capacity monetization agreement closed on October 1, 2026, with net proceeds of $1.3 billion. Source
New: Investor relations contact changed from Sergio Castro, Vice President & Treasurer, to Bill Appicelli, Senior Vice President, Investor Relations. Source

Results and growth drivers

Adjusted EBITDA rose to $669 million: Third quarter Adjusted EBITDA was $669 million against $363 million a year earlier. The company attributed the $306 million increase to acquired generation, higher settled prices and volumes, and higher capacity revenues. Source
Net income fell on derivative losses: GAAP net income attributable to stockholders was $138 million against $207 million. Management cited unrealized mark-to-market losses on commodity derivatives and higher acquisition-financing interest expense as the offsetting items. Source
Adjusted free cash flow rose to $433 million: Adjusted Free Cash Flow was $433 million against $223 million, an increase of $210 million. Higher cash interest payments on acquisition financings partly offset the gain. Source
Nine-month Adjusted EBITDA reached $1,516 million: Nine-month Adjusted EBITDA was $1,516 million against $653 million. Nine-month Adjusted Free Cash Flow was $995 million against $232 million. Source
Diluted EPS was $2.88: Diluted net income per share was $2.88 in the third quarter 2026 against $4.25 a year earlier. Nine-month diluted net income per share was $2.33 against $2.96. Source

Fleet and generation volumes

Generation rose to 23.9 TWh: Total generation was 23.9 TWh against 11.1 TWh, and capacity factor was 75.4% against 56.6%. Nine-month generation was 53.5 TWh against 28.1 TWh. Source
Fleet totals about 15.5 GW: The company says it owns about 15.5 GW, including 2.2 GW of nuclear power, with generation in the Mid-Atlantic, Ohio, Indiana and Montana. The prior release gave 15.7 GW. Source
Cornerstone added about 2.6 GW: The Cornerstone Acquisition closed on June 15, 2026, adding about 2.6 GW of baseload and peaker generation, as stated in the prior quarter's release.

“Share repurchases remain the benchmark against which we evaluate capital allocation.”
Terry Nutt, Talen President

Revenue and capacity sales

Energy revenues nearly doubled: Energy and other revenues were $1,187 million against $604 million in the quarter, and $2,943 million for nine months against $1,552 million. Source
Capacity revenues rose to $323 million: Capacity revenues were $323 million against $166 million in the quarter, and $767 million for nine months against $303 million. Source
Future PJM capacity cash flows monetized: On October 1, 2026, the company closed a deal to sell rights to about $1.5 billion of future PJM capacity cash flows for the 2027/2028 and 2028/2029 capacity years. Source
Sales go into wholesale markets: The company says it produces and sells electricity, capacity and ancillary services into wholesale U.S. power markets. Source

Costs and expenses

Fuel and energy purchases more than doubled: Fuel and energy purchases were $626 million against $259 million in the quarter, and $1,546 million for nine months against $677 million. Source
Interest expense rose on acquisition debt: Interest expense and other finance charges were $148 million against $67 million, which management tied to acquisition financings. Nine-month interest was $481 million against $203 million. Source
Stock-based compensation expense rose: General and administrative expense was $76 million against $38 million, including stock-based compensation of $51 million against $15 million. Source
Depreciation and amortization rose: Depreciation, amortization and accretion was $157 million against $61 million in the quarter, and $352 million for nine months against $205 million. Source
Stock-based awards cash-settled: Cash settlement of stock-based awards was $500 million in the nine months, shown within operating cash flow. Source

“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.”
Terry Nutt, Talen President

Margins, pricing and hedging

Operating income was $255 million: Operating income was $255 million against $263 million in the third quarter 2025, and $393 million for nine months against $223 million. Source
Settled prices cited as driver: Management cited higher settled power prices and generation volumes, net of realized hedges, as drivers of the Adjusted EBITDA increase. Source
Unrealized derivative losses in revenue: Unrealized losses on derivative instruments in operating revenues were $183 million in the quarter against a $42 million gain, and $507 million for nine months. Source
Hedge coverage stated for three periods: As of September 30, 2026, including the Nuclear Production Tax Credit, the company had hedged about 80% of expected generation for October to December 2026, about 70% for 2027 and about 35% for 2028. Source
Hedging framed as risk policy: Management describes hedging as a component of its comprehensive risk policy, aimed at more stable cash flow while keeping some gain potential. Source

Demand and the PJM market

PJM demand growth cited for fleet: Terry Nutt said growing demand across PJM strengthens the position of the fleet and supports a focus on Adjusted Free Cash Flow per share over the coming years. Source
Prior-quarter PJM auction clearing: In the prior quarter the company reported clearing over 10 GW in the 2028/2029 PJM Base Residual Auction at $325.00 per megawatt-day for the MAAC, PPL and RTO areas.
Prior-quarter development pipeline: The prior quarter also cited a pipeline of about 4 GW of land development and data center contracting options. The third quarter release does not restate it.

Share repurchases and shareholder returns

Accelerated buyback of $1.5 billion: The company announced a $1.5 billion accelerated share repurchase, expected to complete by the end of the first quarter 2027. On October 1 it received about 3.8 million shares, equal to 80% of the ASR value. Source
Repurchase program raised to $3.0 billion: The share repurchase program was upsized from $1.5 billion to $3.0 billion of remaining capacity through December 31, 2028, including the ASR. Source
Third-quarter repurchases outside ASR: During the third quarter 2026 the company repurchased 600,000 shares for about $204 million, separate from the ASR program. Nine-month share repurchases were $502 million in the cash flow statement. Source
ASR funded by monetization and cash: Management said the repurchases were funded by net proceeds of $1.3 billion from the PJM capacity monetization and by cash on hand. Source
More than one-third of shares retired: Terry Nutt said the company has repurchased more than one-third of the shares outstanding at emergence. Source

Balance sheet, liquidity and capital spending

Liquidity about $1.6 billion: As of October 30, 2026, total available liquidity was about $1.6 billion, including $220 million of unrestricted cash. The July 31 figure was $1.9 billion. Source
Net leverage target of 3.5x: The company said it is focused on maintaining its net leverage target of 3.5x net debt to Adjusted EBITDA. Source
Net capital expenditures rose: Capital expenditures, net were $77 million in the quarter against $65 million, and $200 million for nine months against $164 million. Source
Nine-month property spending $348 million: Property, plant and equipment expenditures were $348 million for nine months against $72 million. Long-term debt was $9,540 million at September 30, 2026, against $6,782 million at December 31, 2025. Source

Guidance for 2026 and 2027

2026 midpoints reaffirmed, ranges narrowed: After nine months, management kept the 2026 Adjusted EBITDA and Adjusted Free Cash Flow midpoints and narrowed both ranges. Source
2027 midpoints imply about 26% and 27% growth: The company said the 2027 midpoints represent about 26% growth for Adjusted EBITDA and about 27% for Adjusted Free Cash Flow, compared with 2026 guidance. Source
2027 basis: PJM and acquired assets: Management said the 2027 guidance reflects PJM fundamentals and a full year of contributions from recently acquired assets. Source

Coming up, as management said on 3 November 2026

ASR final settlement by Q1 2027: Management expects final settlement of the ASR no later than the first quarter of 2027. Source
Share count after ASR completion: At current prices, after the ASR completes, the company expects about 19.5 million shares repurchased since 2024 for about $4.0 billion, with $1.5 billion remaining under the SRP. Source

In management's words

“We are also introducing our 2027 guidance that reflects strong PJM fundamentals and a full year of contributions from our recently acquired assets”
Mac McFarland, Talen Chief Executive Officer

Figures management reported

Figure	Reported
Capital plan Source	Net capital expenditures of $(325) - $(335) million for 2026 and $(355) - $(385) million for 2027

Risks management discussed

Financial: Unrealized mark-to-market losses on commodity derivatives reduced GAAP net income this quarter, alongside higher acquisition-financing interest. Source
Financial: Cash interest payments were $149 million in the quarter against $36 million, following acquisition financings. Source
External: Generation not covered by hedges remains exposed to market prices; hedged shares are stated as about 70% for 2027 and about 35% for 2028. Source
Financial: Unrestricted cash was $220 million as of October 30, 2026, with the rest of liquidity from the revolving credit facility. Source

Earlier plans management reported on

Not stated: Management reaffirmed the 2026 midpoints after nine months and narrowed the ranges. Source
Not stated: Final settlement of the ASR is stated as expected no later than the first quarter of 2027. Source
Not stated: Management said it is focused on maintaining the 3.5x net leverage target. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

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

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, November 3, 2026 - 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)	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/.

Forward-Looking Statements

Forward-looking statements notice

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)	$ -	$ -
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	122		61		273		198
Nuclear fuel amortization	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	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

(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

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

Contacts
Bill Appicelli
Senior Vice President, Investor Relations
InvestorRelations@talenenergy.com
Taryne Williams
Director, Corporate Communications
Taryne.Williams@talenenergy.com