Talen Energy Reports First Quarter 2025 Results, Affirms and Narrows 2025 Guidance
Earnings Release Highlights
-- First quarter GAAP Net Income (Loss) Attributable to Stockholders of
$(135) million.
-- First quarter Adjusted EBITDA of $200 million and Adjusted Free Cash Flow
of $87 million, ahead of internal estimates.
-- Affirming and narrowing 2025 guidance; 2026 outlook unchanged.
-- Extended the Susquehanna Unit 2 refueling outage to perform incremental
maintenance that is expected to improve capacity performance and
efficiency.
-- The Federal Energy Regulatory Commission (the "FERC") approved the terms
of the reliability-must-run ("RMR") settlement agreement between Talen,
PJM, and key stakeholders to run units at Brandon Shores and H.A. Wagner
generation facilities through May 31, 2029.
HOUSTON, May 08, 2025 (GLOBE NEWSWIRE) -- Talen Energy Corporation ("Talen," the "Company," "we," or "our") (NASDAQ: TLN), an independent power producer dedicated to powering the future, today reported its first quarter 2025 financial and operating results.
"We are pleased today to report Talen's solid start to the year. Our fleet ran well during periods of high demand demonstrating the value of our dispatchable fleet, earning $200 million of Adjusted EBITDA and $87 million of Adjusted Free Cash Flow. We are affirming and narrowing guidance. We remain committed to shareholders and continued to repurchase stock during the first quarter under our share repurchase program," said Talen President and Chief Executive Officer Mac McFarland.
McFarland continued, "The FERC approved our RMR settlement agreement, ensuring the units at our Brandon Shores and H.A. Wagner assets continue to support the grid in and around Baltimore. The AWS campus is energized and we are actively executing under this arrangement. We continue to pursue commercial and regulatory solutions for the Susquehanna ISA amendment."
Summary of Financial and Operating Results (Unaudited)
Three Months Ended March 31,
--------------------------------------
(Millions of Dollars Unless
Otherwise Stated) 2025 2024
--------------------------------- -------------------- ----------------
GAAP Net Income (Loss)
Attributable to Stockholders $ (135) $ 294
Adjusted EBITDA 200 289
Adjusted Free Cash Flow 87 194
Total Generation (TWh) (a) 9.7 8.1
Carbon-Free Generation 46% 58%
OSHA TRIR (b) 0.4 0.3
Fleet EFOF (c) 1.2% 1.9%
---------------------------------- --- --------- --- ------ ---
______________________
(a) (Total generation is net of station use consumption,
where applicable, includes volumes produced by Susquehanna
in support of Nautilus operations and includes generation
from ERCOT assets for the three months ended March
31, 2024.)
(b) OSHA Total Recordable Incident Rate ("OSHA TRIR") is the number
of recordable incidents x 200,000 / total number of manhours
worked. Only includes Talen-operated generation facilities
(i.e., excludes Conemaugh and Keystone).
(c) Fleet Equivalent Forced Outage Factor ("Fleet EFOF")
is the percentage of a given period in which a generating
unit is not available due to forced outages and forced
de-rates. Represents all generation facilities, including
our portion of partially-owned facilities.
For the quarter ended March 31, 2025, we reported GAAP Net Income (Loss) Attributable to Stockholders of $(135) million, Adjusted EBITDA of $200 million and Adjusted Free Cash Flow of $87 million. GAAP Net Income (Loss) Attributable to Stockholders decreased $(429) million compared to prior year, primarily due to the absence of the gain on the sale of the AWS Data Campus, unrealized losses in the nuclear facility decommission trust, and lower realized hedge gains due to higher settled PJM West Hub on-peak prices as a result of colder than normal weather. The decrease in Adjusted EBITDA of $(89) million and Adjusted Free Cash Flow of $(107) million compared to first quarter 2024 was primarily due to lower realized hedge gains.
Our generation fleet continued to run reliably and safely, with a Fleet EFOF of 1.2% and an OSHA TRIR of 0.4. Total generation was 9.7 TWh, with 46% contributed from carbon-free nuclear generation at our Susquehanna nuclear facility. Also, our PJM gas-fired assets were dispatched more frequently during times of peak load than they were in 2024.
Affirming and Narrowing 2025 Guidance; 2026 Outlook Unchanged
(Millions of Dollars) 2025E
-------------
Adjusted EBITDA $975 - $1,125
Adjusted Free Cash Flow $450 - $540
------------------------- -------------
Susquehanna Refueling Outage
On March 25, 2025, Susquehanna commenced its planned refueling outage on Unit 2. During the outage, we identified incremental maintenance in the non-nuclear portion of the Unit which we expect will lead to operational efficiency. As a prudent operator, we have elected to complete this scope of work while Unit 2 is already in outage and market prices and demand are relatively low. The incremental maintenance investment is expected to add roughly $20 million of additional spend and extend the outage into mid-May. We anticipate the resulting improvements in operational efficiency of Unit 2 will be long-term in nature and pay back the additional costs and lost margin in approximately one-and-a-half years.
RMR Arrangement
On May 1, 2025, the FERC approved the terms under which Talen will operate the units at its Brandon Shores and H.A. Wagner generation facilities until May 31, 2029, beyond their scheduled May 31, 2025 retirement dates. Talen, PJM, and a broad coalition of the Maryland Public Service Commission, Maryland customers, and electric utilities reached agreement in January 2025 on the "reliability-must-run" or "RMR" agreement. Under the RMR agreement, Brandon Shores Units 1 and 2 and H.A. Wagner Units 3 and 4 will remain in service and provide power necessary to maintain grid and transmission reliability in and around the City of Baltimore until transmission upgrades to provide reliable power to the area from other sources are complete. Beginning June 1, 2025, we expect to receive $145 million annually for Brandon Shores and $35 million for H.A. Wagner with some performance incentives.
Share Repurchases
Since the start of 2024, we have repurchased approximately 14 million shares, or 23% of our outstanding shares, for a total of approximately $2 billion, with $995 million remaining under our share repurchase program through year-end 2026. During the first quarter 2025, we repurchased 452,130 shares of stock for a total of $83 million. All share repurchase amounts exclude transaction costs.
Balance Sheet and Liquidity
We are focused on maintaining net leverage below our target of 3.5x net debt-to-Adjusted EBITDA, along with ample liquidity. As of May 2, 2025, we had total available liquidity of approximately $970 million, comprised of $270 million of unrestricted cash and $700 million of available capacity under the revolving credit facility. Our projected net leverage ratio, utilizing the 2025E Adjusted EBITDA midpoint and net debt balance as of May 2, 2025, is approximately 2.6x.
Update on Hedging Activities
As of March 31, 2025, including the impact of the Nuclear PTC, we had hedged approximately 95% of our expected generation volumes for 2025, 60% for 2026 and 30% for 2027. The Company'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
The Company will hold an earnings call on Thursday, May 8, 2025, at 9:00 a.m. EDT (8:00 a.m. CDT). 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. For those unable to participate in the live event, a digital replay of the earnings call will be archived for approximately one year and available on Talen's Investor Relations website at https://ir.talenenergy.com/news-events/events.
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 10.7 gigawatts of power infrastructure in the United States, including 2.2 gigawatts 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 our generation fleet principally located in the Mid-Atlantic 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 capture this significant growth opportunity, as data centers serving artificial intelligence increasingly demand more reliable, clean power. Talen is headquartered in Houston, Texas. For more information, visit https://www.talenenergy.com/.
Investor Relations:
Sergio Castro
Vice President & Treasurer
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, capital expenditures, earnings, litigation, regulatory matters, hedging, liquidity and capital resources and accounting matters. 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 March 31,
--------------------------------
(Millions of Dollars, except
share data) 2025 2024
--------------------------------- -------------- ----------------
Capacity revenues $ 49 $ 45
Energy and other revenues 582 572
Unrealized gain (loss) on
derivative instruments (241) (108)
---------------------------------- ------------ ------------
Operating Revenues 390 509
Fuel and energy purchases (268) (150)
Nuclear fuel amortization (26) (35)
Unrealized gain (loss) on
derivative instruments 59 (27)
---------------------------------- ------------ ------------
Energy Expenses (235) (212)
Operating Expenses
Operation, maintenance and
development (146) (154)
General and administrative (34) (43)
Depreciation, amortization and
accretion (74) (75)
Other operating income (expense),
net (7) --
---------------------------------- ------------ ------------
Operating Income (Loss) (106) 25
Nuclear decommissioning trust
funds gain (loss), net (12) 75
Interest expense and other finance
charges (74) (59)
Gain (loss) on sale of assets, net 2 324
Other non-operating income
(expense), net 3 23
---------------------------------- ------------ ------------
Income (Loss) Before Income Taxes (187) 388
Income tax benefit (expense) 52 (69)
---------------------------------- ------------ ------------
Net Income (Loss) (135) 319
Less: Net income (loss)
attributable to noncontrolling
interest -- 25
---------------------------------- ------------ ------------
Net Income (Loss) Attributable to
Stockholders $ (135) $ 294
================================== ============ ============
Per Common Share
Net Income (Loss) Attributable to
Stockholders - Basic $ (2.94) $ 5.00
Net Income (Loss) Attributable to
Stockholders - Diluted $ (2.94) $ 4.84
Weighted-Average Number of Common
Shares Outstanding - Basic (in
thousands) 45,849 58,807
Weighted-Average Number of Common
Shares Outstanding - Diluted (in
thousands) 45,849 60,716
---------------------------------- ------------ ------------
TALEN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, December 31,
(Millions of Dollars, except share data) 2025 2024
---------------------------------------- ----------- ----------------
Assets
Cash and cash equivalents $ 295 $ 328
Restricted cash and cash equivalents 25 37
Accounts receivable 100 123
Inventory, net 219 302
Derivative instruments 33 66
Other current assets 174 184
----------------------------------------- ------ ---------
Total current assets 846 1,040
----------------------------------------- ------ ---------
Property, plant and equipment, net 3,138 3,154
Nuclear decommissioning trust funds 1,717 1,724
Derivative instruments 5 5
Other noncurrent assets 159 183
----------------------------------------- ------ ---------
Total Assets $ 5,865 $ 6,106
========================================= ====== =========
Liabilities and Equity
Long-term debt, due within one year $ 17 $ 17
Accrued interest 54 18
Accounts payable and other accrued
liabilities 203 266
Derivative instruments 92 --
Other current liabilities 156 154
----------------------------------------- ------ ---------
Total current liabilities 522 455
----------------------------------------- ------ ---------
Long-term debt 2,975 2,987
Derivative instruments 42 7
Postretirement benefit obligations 289 305
Asset retirement obligations and accrued
environmental costs 468 468
Deferred income taxes 294 362
Other noncurrent liabilities 95 135
----------------------------------------- ------ ---------
Total Liabilities $ 4,685 $ 4,719
========================================= ====== =========
Commitments and Contingencies
Stockholders' Equity
Common stock ($0.001 par value,
350,000,000 shares authorized) (a) $ -- $ --
Additional paid-in capital 1,718 1,725
Accumulated retained earnings (deficit) (528) (326)
Accumulated other comprehensive income
(loss) (10) (12)
----------------------------------------- ------ ---------
Total Stockholders' Equity 1,180 1,387
Total Liabilities and Stockholders'
Equity $ 5,865 $ 6,106
========================================= ====== =========
______________________
(a) 45,509,780 and 45,961,910 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.
TALEN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31,
(Millions of Dollars) 2025 2024
Operating Activities
Net Income (Loss) $ (135) $ 319
Non-cash reconciliation
adjustments:
Unrealized (gains) losses on
derivative instruments 196 128
Depreciation, amortization and
accretion 72 74
Deferred income taxes (70) 57
Nuclear fuel amortization 26 35
Nuclear decommissioning trust
funds (gain) loss, net (excluding
interest and fees) 23 (64)
(Gain) loss on AWS Data Campus
Sale -- (324)
Other 37 (42)
Changes in assets and
liabilities:
Accounts receivable 23 11
Inventory, net 83 89
Other assets 22 (1)
Accounts payable and accrued
liabilities (60) (154)
Accrued interest 36 29
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