Core Viewpoint - Talen Energy Corporation reported quarterly earnings of $1.5 per share, significantly exceeding the Zacks Consensus Estimate of a loss of $1.13 per share, and showing a substantial increase from earnings of $0.19 per share a year ago [1][2]. Financial Performance - The earnings surprise for the quarter was +232.74%, with the company previously expected to post earnings of $1.17 per share but actually reporting $0.82, resulting in a surprise of -29.91% [2]. - Talen Energy's revenues for the quarter ended June 2025 were $630 million, surpassing the Zacks Consensus Estimate by 31.07%, compared to $489 million in the same quarter last year [3]. - Over the last four quarters, Talen Energy has exceeded consensus EPS estimates two times and has also topped consensus revenue estimates twice [2][3]. Stock Performance - Talen Energy shares have increased approximately 88% since the beginning of the year, outperforming the S&P 500, which gained 7.9% during the same period [4]. - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [4]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $4.47, with expected revenues of $736.04 million, and for the current fiscal year, the estimate remains at $4.47 with revenues projected at $2.3 billion [8]. - The estimate revisions trend for Talen Energy was favorable ahead of the earnings release, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [7]. Industry Context - The Alternative Energy - Other industry, to which Talen Energy belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, suggesting that the overall industry outlook may impact stock performance [9].

Financial Performance - Talen Energy delivered $90 million in Adjusted EBITDA and $(78) million in Adjusted Free Cash Flow in Q2 2025 [10] - The company reaffirmed its 2025 guidance for Adjusted EBITDA to be between $975 million and $1125 million, and Adjusted Free Cash Flow to be between $450 million and $540 million [10, 33] - Talen Energy reported ~$09 billion in liquidity and a net debt to 2025E Adjusted EBITDA ratio of ~27x [24] - Since the start of 2024, Talen has repurchased ~14 million shares, representing ~23% of total outstanding shares, with ~$1 billion SRP capacity remaining through year-end 2026 [35] Acquisitions and Capacity - Talen Energy is acquiring Freedom and Guernsey plants, which are expected to increase FCF/share by >40% in 2026 and >50% in 2027-2029 [10] - The company cleared 6,702 MW at $329/MWd in the strong 2026/2027 PJM Capacity Auction results [10] - The Freedom plant is a 1,045 MW CCGT, and Guernsey is an 1,836 MW CCGT [13] Powering Data Centers - Talen Energy expanded its Amazon PPA to 19 GW, totaling ~$18 billion in revenues under a 17-year contract [10] - The expanded PPA unlocks premium value on the 2nd Unit by expanding PPA to 1,920 MW at full contract quantity through 2042 [16] Market and Generation - Talen Energy's total generation was 17 TWh, with ~44% being carbon-free generation [24] - Q2 2025 average electricity demand was flat compared to Q2 2024 [22]

[Executive Summary](index=1&type=section&id=executive-summary) Summarizes Talen Energy's Q2 2025 performance, strategic initiatives, and reaffirmed 2025 guidance [Second Quarter 2025 Performance Overview](index=1&type=section&id=second-quarter-2025-performance-overview) Talen Energy reported Q2 2025 results, with **$90 million** Adjusted EBITDA and **$(78) million** Adjusted Free Cash Flow, reaffirming 2025 guidance | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | GAAP Net Income (Loss) Attributable to Stockholders | $72 million | $454 million | $(63) million | $748 million | | Adjusted EBITDA | $90 million | $87 million | $290 million | $376 million | | Adjusted Free Cash Flow | $(78) million | $(29) million | $9 million | $165 million | | Total Generation (TWh) | **7.3** | **8.2** | **17.0** | **16.3** | | Carbon-Free Generation | **41%** | **49%** | **44%** | **53%** | | OSHA TRIR | **0.7** | **0.2** | **0.6** | **0.3** | | Fleet EFOF | **2.3%** | **2.2%** | **1.8%** | **2.0%** | - Second quarter GAAP Net Income Attributable to Stockholders was **$72 million**[7](index=7&type=chunk) - Second quarter Adjusted EBITDA was **$90 million** and Adjusted Free Cash Flow use was **$(78) million**[7](index=7&type=chunk) [Strategic Highlights](index=1&type=section&id=strategic-highlights) Talen Energy expanded its Amazon partnership, acquired Freedom and Guernsey plants, and cleared significant PJM capacity, enhancing data center service - Expanded existing relationship with Amazon to provide additional energy to Amazon Web Services ("AWS"), offering flexibility to support power delivery to other Pennsylvania sites[7](index=7&type=chunk) - Signed definitive agreements to acquire Caithness Energy's Freedom Energy Center in Pennsylvania and Guernsey Power Station in Ohio, both baseload combined-cycle gas-fired plants located within the PJM power market[7](index=7&type=chunk) - Cleared **6,702 megawatts** ("MWs") in the 2026/2027 PJM Base Residual Auction ("BRA") at **$329.17 per megawatt-day** ("MWd") for the MAAC, PPL, and PSEG locational deliverability areas[7](index=7&type=chunk) [2025 Guidance Reaffirmation](index=1&type=section&id=2025-guidance-reaffirmation) Talen Energy reaffirmed its 2025 guidance for Adjusted EBITDA and Adjusted Free Cash Flow, demonstrating confidence in its financial projections - Reaffirming 2025 guidance[5](index=5&type=chunk)[7](index=7&type=chunk) [Financial and Operational Performance](index=1&type=section&id=financial-and-operational-performance) Provides a comprehensive overview and detailed analysis of Talen Energy's financial and operational results for Q2 and H1 2025 [Summary of Financial and Operating Results](index=1&type=section&id=summary-of-financial-and-operating-results) This section provides a high-level overview of Talen Energy's financial and operational performance for Q2 and H1 2025, highlighting key metrics | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | GAAP Net Income (Loss) Attributable to Stockholders | $72 million | $454 million | $(63) million | $748 million | | Adjusted EBITDA | $90 million | $87 million | $290 million | $376 million | | Adjusted Free Cash Flow | $(78) million | $(29) million | $9 million | $165 million | | Total Generation (TWh) | **7.3** | **8.2** | **17.0** | **16.3** | | Carbon-Free Generation | **41%** | **49%** | **44%** | **53%** | | OSHA TRIR | **0.7** | **0.2** | **0.6** | **0.3** | | Fleet EFOF | **2.3%** | **2.2%** | **1.8%** | **2.0%** | [Detailed Financial Performance Analysis](index=2&type=section&id=detailed-financial-performance-analysis) GAAP Net Income decreased significantly due to a prior-year asset sale gain absence; Adjusted EBITDA increased modestly, while Adjusted Free Cash Flow declined - GAAP Net Income (Loss) Attributable to Stockholders decreased **$(382) million** primarily due to the absence of the gain and associated tax expense from the sale of the ERCOT portfolio. This was partially offset by an increase in capacity revenues, but also impacted by higher operation and maintenance expenses due to the extended Susquehanna refueling outage[17](index=17&type=chunk) - Adjusted EBITDA increased **$3 million**, mainly due to an increase in capacity revenues, partially offset by higher operation and maintenance expenses from the extended Susquehanna refueling outage[17](index=17&type=chunk) - Adjusted Free Cash Flow decreased **$(49) million**, primarily attributable to higher cash income tax payments and capital expenditures associated with the extended Susquehanna refueling outage[17](index=17&type=chunk) - The generation fleet maintained reliability and safety with a Fleet EFOF of **2.3%** and an OSHA TRIR of **0.7**. Total generation was **7.3 terawatt-hours** ("TWh"), with **41%** from carbon-free nuclear generation[9](index=9&type=chunk) [Strategic Initiatives and Business Development](index=2&type=section&id=strategic-initiatives-and-business-development) Details Talen Energy's key strategic moves, including an expanded AWS PPA, significant acquisitions, and PJM capacity auction results [Data Center Power Purchase Agreement with AWS](index=2&type=section&id=data-center-power-purchase-agreement-with-aws) Talen expanded its PPA with AWS to supply up to **1,920 MWs** of power through 2042, reducing market risk and exploring new nuclear options - New PPA with AWS, entered in June 2025, will supply electricity for AWS' data center campus adjacent to Susquehanna, with flexibility to deliver to other Pennsylvania sites[11](index=11&type=chunk) - Talen and AWS will explore building new small modular reactors within Talen's Pennsylvania footprint and pursue expanding the nuclear plant's energy output through uprates, with the intent to add net-new energy to the PJM grid[11](index=11&type=chunk) - Under the expanded PPA, Talen expects to provide AWS with up to **1,920 MWs** of power through 2042, with options to extend. This long-term transaction will significantly decrease Talen's market risk and minimize its reliance on the Federal nuclear production tax credit[12](index=12&type=chunk) [Freedom and Guernsey Acquisitions](index=2&type=section&id=freedom-and-guernsey-acquisitions) Talen agreed to acquire Freedom and Guernsey power plants for **$3.5 billion**, expected to be immediately accretive to free cash flow per share and close in **Q4 2025** - On July 17, 2025, Talen entered into definitive agreements to acquire Freedom Energy Center (Pennsylvania) and Guernsey Power Station (Ohio), both baseload combined-cycle gas-fired plants located within the PJM power market[13](index=13&type=chunk) - The net acquisition price is **$3.5 billion** (after estimated tax benefits), or approximately **$3.8 billion** gross, reflecting an attractive acquisition multiple of **6.7x 2026 EV/EBITDA**[14](index=14&type=chunk) - The transaction is expected to be immediately accretive to free cash flow per share by **over 40%** in 2026, and **over 50%** from 2027 through 2029. Talen expects to issue approximately **$3.8 billion** in new debt to fund the acquisitions and refinance target debt[14](index=14&type=chunk)[15](index=15&type=chunk) - Both acquisitions are expected to close in the **fourth quarter 2025**, subject to customary closing conditions and regulatory approvals[16](index=16&type=chunk) [PJM Capacity Auction Results](index=3&type=section&id=pjm-capacity-auction-results) Talen cleared **6,702 MWs** in the 2026/2027 PJM auction at **$329.17/MWd**, projected to generate approximately **$805 million** in capacity revenues - Talen cleared **6,702 MWs** in the 2026/2027 PJM BRA at a price of **$329.17/MWd**[18](index=18&type=chunk) - This equates to approximately **$805 million** in capacity revenues for the 2026/2027 PJM Capacity Year (excluding potential impacts from Freedom and Guernsey transactions)[18](index=18&type=chunk) - The 2027/2028 PJM BRA is scheduled for December 2025[18](index=18&type=chunk) [Index Inclusion](index=3&type=section&id=index-inclusion) Talen was added to various Russell indices in Q2 2025 and other major indices since September 2024, potentially increasing stock demand - During the second quarter 2025, Talen was added to various Russell indices[19](index=19&type=chunk) - Since September 2024, Talen has been added to the S&P Total Market Index, S&P Completion Index, CRSP Total Market Index, CRSP Small Cap Index and MSCI USA Small Cap Index[19](index=19&type=chunk) [Financial Position and Outlook](index=2&type=section&id=financial-position-and-outlook) Presents Talen Energy's current liquidity, leverage targets, hedging strategy, and reaffirmed financial guidance for 2025 [Balance Sheet and Liquidity](index=3&type=section&id=balance-sheet-and-liquidity) As of August 4, 2025, Talen reported **$861 million** liquidity, committed to **below 3.5x** net leverage by year-end 2026, with a projected ratio of **2.7x** - As of August 4, 2025, Talen had ample total available liquidity of approximately **$861 million**, comprised of **$161 million** of unrestricted cash and **$700 million** of available capacity under the revolving credit facility[20](index=20&type=chunk) - The company is committed to net leverage targets **below 3.5x** net debt-to-Adjusted EBITDA following the post-acquisition deleveraging period and intends to be **below 3.5x** net leverage by year-end 2026[20](index=20&type=chunk) - The projected net leverage ratio, utilizing the 2025E Adjusted EBITDA midpoint and net debt balance as of August 4, 2025, is approximately **2.7x**[20](index=20&type=chunk) [Hedging Activities](index=3&type=section&id=hedging-activities) Talen's hedging program secured **100%** of 2025, **66%** of 2026, and **33%** of 2027 expected generation volumes, aiming for cash flow stability | Year | Expected Generation Volumes Hedged (as of June 30, 2025, including Nuclear PTC) | | :--- | :--------------------------------------------------------------------------------- | | 2025 | **~100%** | | 2026 | **66%** | | 2027 | **33%** | - 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[21](index=21&type=chunk) [2025 Guidance](index=2&type=section&id=2025-guidance) Talen Energy reaffirmed its 2025 guidance, providing expected ranges for Adjusted EBITDA and Adjusted Free Cash Flow | (Millions of Dollars) | 2025E Low | 2025E High | | :-------------------- | :-------- | :--------- | | Adjusted EBITDA | $975 | $1,125 | | Adjusted Free Cash Flow | $450 | $540 | [Company Information](index=3&type=section&id=company-information) Offers an overview of Talen Energy's business, contact details for investor relations, and a standard disclosure on forward-looking statements [About Talen Energy](index=3&type=section&id=about-talen-energy) Talen Energy is a leading independent power producer operating approximately **10.5 gigawatts** of power infrastructure, positioned to serve AI data centers - Talen Energy (NASDAQ: TLN) is a leading independent power producer and energy infrastructure company dedicated to powering the future[23](index=23&type=chunk) - We own and operate approximately **10.5 gigawatts** of power infrastructure in the United States, including **2.2 gigawatts** of nuclear power and a significant dispatchable fossil fleet[23](index=23&type=chunk) - Talen is well-positioned to serve the growing digital infrastructure revolution, as artificial intelligence data centers increasingly demand more reliable, clean power[23](index=23&type=chunk) [Investor Relations & Media Contacts](index=3&type=section&id=investor-relations-media-contacts) This section provides contact details for investor relations and media inquiries - Investor Relations contact: Sergio Castro, Vice President & Treasurer, InvestorRelations@talenenergy.com[24](index=24&type=chunk) - Media contact: Taryne Williams, Director, Corporate Communications, Taryne.Williams@talenenergy.com[24](index=24&type=chunk) [Forward-Looking Statements](index=4&type=section&id=forward-looking-statements) This standard disclosure highlights that the communication contains forward-looking statements subject to substantial risks and uncertainties - This communication contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties[25](index=25&type=chunk) - Forward-looking statements address future events and conditions concerning, among other things, proposed acquisitions, financing, capital expenditures, earnings, litigation, regulatory matters, hedging, liquidity, and capital resources[25](index=25&type=chunk) - All forward-looking statements include assumptions that may cause actual results to differ materially from expectations and are subject to numerous factors that present considerable risks and uncertainties[25](index=25&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=condensed-consolidated-financial-statements-unaudited) Contains the unaudited condensed consolidated statements of operations, balance sheets, and cash flows for specified periods [Statements of Operations](index=5&type=section&id=statements-of-operations) This section presents the unaudited condensed consolidated statements of operations, detailing revenues, expenses, and net income (loss) | (Millions of Dollars, except share data) | 2025 (3 Months) | 2024 (3 Months) | 2025 (6 Months) | 2024 (6 Months) | | :--------------------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Capacity revenues | $88 | $46 | $137 | $91 | | Energy and other revenues | $366 | $367 | $948 | $939 | | Unrealized gain (loss) on derivative instruments | $176 | $76 | $(65) | $(32) | | **Operating Revenues** | **$630** | **$489** | **$1,020** | **$998** | | Fuel and energy purchases | $(150) | $(163) | $(418) | $(313) | | Nuclear fuel amortization | $(18) | $(28) | $(44) | $(63) | | Unrealized gain (loss) on derivative instruments | $(84) | $15 | $(25) | $(12) | | **Energy Expenses** | **$(252)** | **$(176)** | **$(487)** | **$(388)** | | Operation, maintenance and development | $(192) | $(164) | $(338) | $(318) | | General and administrative | $(41) | $(40) | $(75) | $(83) | | Depreciation, amortization and accretion | $(70) | $(75) | $(144) | $(150) | | Other operating income (expense), net | $(9) | $(7) | $(16) | $(7) | | **Operating Income (Loss)** | **$66** | **$27** | **$(40)** | **$52** | | Nuclear decommissioning trust funds gain (loss), net | $80 | $27 | $68 | $102 | | Interest expense and other finance charges | $(62) | $(62) | $(136) | $(121) | | Gain (loss) on sale of assets, net | $9 | $561 | $11 | $885 | | Other non-operating income (expense), net | $4 | $17 | $7 | $40 | | **Income (Loss) Before Income Taxes** | **$97** | **$570** | **$(90)** | **$958** | | Income tax benefit (expense) | $(25) | $(112) | $27 | $(181) | | **Net Income (Loss)** | **$72** | **$458** | **$(63)** | **$777** | | Less: Net income (loss) attributable to noncontrolling interest | — | $4 | — | $29 | | **Net Income (Loss) Attributable to Stockholders** | **$72** | **$454** | **$(63)** | **$748** | | Net Income (Loss) Attributable to Stockholders - Basic | $1.58 | $7.90 | $(1.38) | $12.87 | | Net Income (Loss) Attributable to Stockholders - Diluted | $1.50 | $7.60 | $(1.38) | $12.41 | | Weighted-Average Number of Common Shares Outstanding - Basic (in thousands) | 45,554 | 57,434 | 45,699 | 58,119 | | Weighted-Average Number of Common Shares Outstanding - Diluted (in thousands) | 47,905 | 59,775 | 45,699 | 60,269 | [Balance Sheets](index=6&type=section&id=balance-sheets) This section presents the unaudited condensed consolidated balance sheets, providing a snapshot of assets, liabilities, and equity | (Millions of Dollars, except share data) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | **Assets** | | | | Cash and cash equivalents | $122 | $328 | | Restricted cash and cash equivalents | $13 | $37 | | Accounts receivable | $226 | $123 | | Inventory, net | $224 | $302 | | Derivative instruments | $80 | $66 | | Other current assets | $165 | $184 | | **Total current assets** | **$830** | **$1,040** | | Property, plant and equipment, net | $3,089 | $3,154 | | Nuclear decommissioning trust funds | $1,790 | $1,724 | | Derivative instruments | — | $5 | | Other noncurrent assets | $118 | $183 | | **Total Assets** | **$5,827** | **$6,106** | | **Liabilities and Equity** | | | | Revolving credit facilities | $70 | — | | Long-term debt, due within one year | $17 | $17 | | Accrued interest | $30 | $18 | | Accounts payable and other accrued liabilities | $226 | $266 | | Derivative instruments | $32 | — | | Other current liabilities | $77 | $154 | | **Total current liabilities** | **$452** | **$455** | | Long-term debt | $2,972 | $2,987 | | Derivative instruments | $62 | $7 | | Postretirement benefit obligations | $282 | $305 | | Asset retirement obligations and accrued environmental costs | $478 | $468 | | Deferred income taxes | $297 | $362 | | Other noncurrent liabilities | $38 | $135 | | **Total Liabilities** | **$4,581** | **$4,719** | | **Stockholders' Equity** | | | | Common stock | — | — | | Additional paid-in capital | $1,711 | $1,725 | | Accumulated retained earnings (deficit) | $(456) | $(326) | | Accumulated other comprehensive income (loss) | $(9) | $(12) | | **Total Stockholders' Equity** | **$1,246** | **$1,387** | | **Total Liabilities and Stockholders' Equity** | **$5,827** | **$6,106** | [Statements of Cash Flows](index=7&type=section&id=statements-of-cash-flows) This section provides the unaudited condensed consolidated statements of cash flows, detailing cash from operating, investing, and financing activities | (Millions of Dollars) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :----------------------------- | :----------------------------- | | **Operating Activities** | | | | Net Income (Loss) | $(63) | $777 | | Non-cash reconciliation adjustments: | | | | Depreciation, amortization and accretion | $141 | $144 | | Unrealized (gains) losses on derivative instruments | $103 | $36 | | Deferred income taxes | $(66) | $94 | | Nuclear fuel amortization | $44 | $63 | | Nuclear decommissioning trust funds (gain) loss, net (excluding interest and fees) | $(44) | $(80) | | (Gain) loss on AWS Data Campus Sale and ERCOT Sale | — | $(886) | | Other | $34 | $(58) | | Changes in assets and liabilities: | | | | Accounts receivable | $(103) | $(14) | | Inventory, net | $78 | $90 | | Other assets | $15 | $34 | | Accounts payable and accrued liabilities | $(57) | $(114) | | Accrued interest | $12 | $(1) | | Collateral received (posted), net | $(58) | $35 | | Other liabilities | $(101) | $30 | | **Net cash provided by (used in) operating activities** | **$(65)** | **$150** | | **Investing Activities** | | | | Nuclear decommissioning trust funds investment purchases | $(1,201) | $(1,110) | | Nuclear decommissioning trust funds investment sale proceeds | $1,186 | $1,095 | | Nuclear fuel expenditures | $(50) | $(44) | | Property, plant and equipment expenditures | $(51) | $(45) | | Proceeds from AWS Data Campus Sale and ERCOT Sale | — | $1,089 | | Other | $2 | $(6) | | **Net cash provided by (used in) investing activities** | **$(114)** | **$979** | | **Financing Activities** | | | | Share repurchases | $(103) | $(654) | | Revolving credit facility borrowings | $75 | — | | Revolving credit facility repayments | $(5) | — | | Debt repayments | $(9) | — | | Deferred financing costs | $(9) | — | | Cumulus Digital TLF repayment | — | $(182) | | Repurchase of noncontrolling interest | — | $(39) | | Cash settlement of restricted stock units | — | $(28) | | Other | — | $(12) | | **Net cash provided by (used in) financing activities** | **$(51)** | **$(915)** | | Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents | $(230) | $214 | | Beginning of period cash and cash equivalents and restricted cash and cash equivalents | $365 | $901 | | End of period cash and cash equivalents and restricted cash and cash equivalents | $135 | $1,115 | [Non-GAAP Financial Measures](index=8&type=section&id=non-gaap-financial-measures) Explains and reconciles non-GAAP financial measures, including Adjusted EBITDA and Adjusted Free Cash Flow, for historical periods and 2025 guidance [Explanation of Non-GAAP Measures](index=8&type=section&id=explanation-of-non-gaap-measures) This section defines and explains Adjusted EBITDA and Adjusted Free Cash Flow, outlining their purpose, computation, and limitations - Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures used to compare operating performance, plan forecasts, evaluate results, and communicate financial performance to stakeholders[34](index=34&type=chunk)[35](index=35&type=chunk)[38](index=38&type=chunk) - Adjusted EBITDA is computed as net income (loss) adjusted for nonrecurring charges/gains, non-cash items, unusual market events, depreciation, amortization, mark-to-market gains/losses, NDT gains/losses, asset sales, impairments, interest expense, income taxes, legal settlements, development expenses, noncontrolling interests, and other adjustments[36](index=36&type=chunk) - Adjusted Free Cash Flow is computed as Adjusted EBITDA reduced by capital expenditures (excluding development, growth, and conversion capex), cash payments for interest and finance charges, cash payments for income taxes (with specific exclusions), and pension contributions[38](index=38&type=chunk) [Adjusted EBITDA / Adjusted Free Cash Flow Reconciliation (Historical)](index=9&type=section&id=adjusted-ebitda-adjusted-free-cash-flow-reconciliation-historical) This section provides a detailed reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA and Adjusted Free Cash Flow for historical periods | (Millions of Dollars) | 2025 (3 Months) | 2024 (3 Months) | 2025 (6 Months) | 2024 (6 Months) | | :------------------------------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | Net Income (Loss) | $72 | $458 | $(63) | $777 | | Adjustments: | | | | | | Interest expense and other finance charges | $62 | $62 | $136 | $121 | | Income tax (benefit) expense | $25 | $112 | $(27) | $181 | | Depreciation, amortization and accretion | $70 | $75 | $144 | $150 | | Nuclear fuel amortization | $18 | $28 | $44 | $63 | | Unrealized (gain) loss on commodity derivative contracts | $(92) | $(91) | $90 | $44 | | Nuclear decommissioning trust funds (gain) loss, net | $(80) | $(27) | $(68) | $(102) | | Stock-based and other long-term incentive compensation expense | $18 | $14 | $31 | $32 | | (Gain) loss on asset sales, net | $(9) | $(561) | $(11) | $(885) | | Operational and other restructuring activities | — | $19 | $9 | $21 | | Noncontrolling interest | — | $(7) | — | $(18) | | Other | $6 | $5 | $5 | $(8) | | **Total Adjusted EBITDA** | **$90** | **$87** | **$290** | **$376** | | Capital expenditures, net | $(35) | $(21) | $(99) | $(80) | | Interest and finance charge payments | $(84) | $(91) | $(107) | $(125) | | Income taxes | $(42) | $(2) | $(51) | $(2) | | Pension contributions | $(7) | $(2) | $(24) | $(4) | | **Total Adjusted Free Cash Flow** | **$(78)** | **$(29)** | **$9** | **$165** | [Adjusted EBITDA / Adjusted Free Cash Flow Reconciliation (2025 Guidance)](index=10&type=section&id=adjusted-ebitda-adjusted-free-cash-flow-reconciliation-2025-guidance) This section provides a reconciliation of 2025 guidance for Net Income (Loss) to projected Adjusted EBITDA and Adjusted Free Cash Flow ranges | (Millions of Dollars) | 2025E Low | 2025E High | | :------------------------------------------ | :-------- | :--------- | | Net Income (Loss) | $205 | $325 | | Adjustments: | | | | Interest expense and other finance charges | $235 | $245 | | Income tax (benefit) expense | $60 | $80 | | Depreciation, amortization and accretion | $295 | $295 | | Nuclear fuel amortization | $105 | $105 | | Unrealized (gain) loss on commodity derivative contracts | $75 | $75 | | **Adjusted EBITDA** | **$975** | **$1,125** | | Capital expenditures, net | $(195) | $(205) | | Interest and finance charge payments | $(220) | $(230) | | Income taxes | $(40) | $(60) | | Pension contributions | $(70) | $(90) | | **Adjusted Free Cash Flow** | **$450** | **$540** |

Financial Performance - Talen Energy Corporation reported a GAAP Net Income attributable to stockholders of $72 million for Q2 2025, a decrease from $454 million in Q2 2024 [7][9]. - Adjusted EBITDA for the second quarter was $90 million, slightly up from $87 million in the same quarter last year [7][9]. - Adjusted Free Cash Flow showed a use of $(78) million, compared to $(29) million in Q2 2024 [7][9]. Operational Highlights - Total generation for Q2 2025 was 7.3 terawatt-hours (TWh), down from 8.2 TWh in Q2 2024, with carbon-free generation contributing 41% [7][10]. - The Fleet Equivalent Forced Outage Factor (EFOF) was reported at 2.3%, while the OSHA Total Recordable Incident Rate (TRIR) was 0.7 [7][10]. Strategic Initiatives - Talen expanded its relationship with Amazon to provide up to 1.9 gigawatts (GWs) of power, supporting AWS operations and exploring new nuclear energy projects [3][12]. - The company announced the acquisition of Freedom Energy Center and Guernsey Power Station, with a net acquisition price of $3.5 billion, expected to be immediately accretive to free cash flow per share by over 40% in 2026 [15][16]. Capacity Auction Results - Talen cleared 6,702 megawatts (MWs) in the 2026/2027 PJM Base Residual Auction at a price of $329.17 per megawatt-day, equating to approximately $805 million in capacity revenues [8][18]. Guidance and Future Outlook - The company reaffirmed its 2025 guidance for Adjusted EBITDA in the range of $975 million to $1,125 million and Adjusted Free Cash Flow between $450 million and $540 million [11][42]. - An Investor Update is scheduled for September 9, where Talen will discuss its 2026 guidance and outlook for 2027/2028 [4]. Balance Sheet and Liquidity - As of August 4, 2025, Talen had total available liquidity of approximately $861 million, including $161 million in unrestricted cash [20]. - The projected net leverage ratio is approximately 2.7x, with a commitment to maintain net leverage targets below 3.5x by year-end 2026 [20]. Index Inclusion - Talen was added to various Russell indices during Q2 2025, which may lead to increased demand for its stock [19].

Investment Rating - The report does not explicitly state an investment rating for the nuclear energy industry, but it indicates a positive outlook based on various factors driving growth and valuation adjustments. Core Insights - The report highlights a significant increase in electricity demand driven by AI, projecting an incremental power demand of 789 TWh in the U.S. by 2035, with a compound annual growth rate (CAGR) of 14.17% [20][23] - A reversal in uranium supply and demand dynamics is anticipated, with prices expected to rise [55] - The acceleration of domestic uranium production as part of the "de-Russification" strategy is noted, which is expected to enhance local supply capabilities [72] - The revaluation of nuclear power assets is expected to provide operators with increased profitability and valuation flexibility [108] - The commercialization of Small Modular Reactors (SMRs) is accelerating, driven by technological breakthroughs and supportive policies [8] Summary by Sections Section 1: Electricity Demand and AI Impact - The report discusses the surge in electricity demand due to AI, predicting a sustained increase in power gaps post-2027 [10] - It estimates that AI will require significant energy resources, with projections indicating a need for 177 GW of power for AI data centers by 2035 [23] Section 2: Uranium Market Dynamics - The report forecasts a potential supply gap for natural uranium by 2030, with demand expected to outpace supply [63] - It highlights the concentration of uranium enrichment capacity among a few key players, with a projected capacity of 62,900 thousand SWU/year by 2030 [91] - The impact of U.S. legislation banning Russian uranium imports is discussed, which could create a supply gap of approximately 30% in the U.S. market [99] Section 3: Nuclear Power Asset Revaluation - The report emphasizes the revaluation of nuclear power assets, suggesting that operators are likely to benefit from improved profitability and valuation flexibility [108] - It notes the expected growth in SMR capacity from 1 GWe in 2030 to 122.25 GWe by 2050, with a CAGR of 27.16% [57] Section 4: Market Trends and Pricing Signals - The report indicates that forward wholesale electricity prices in the PJM region are expected to rise due to supply-demand tightness [51] - It also mentions the expected increase in uranium prices driven by policy changes and strong fundamentals [68]

One other Oils-Energy stock that has outperformed the sector so far this year is Talen Energy Corporation (TLN) . The stock is up 90.7% year-to-date. Galp Energia SGPS SA is one of 241 companies in the Oils-Energy group. The Oils-Energy group currently sits at #16 within the Zacks Sector Rank. The Zacks Sector Rank considers 16 different sector groups. The average Zacks Rank of the individual stocks within the groups is measured, and the sectors are listed from best to worst. The Zacks Rank is a proven syst ...

Experience is difficult to learn. After 30 plus years of critically analyzing the nuts and bolts of businesses as diverse as airlines, oil, retail, mining to fintech and ecommerce plus the macro, monetary and political drivers. I continue to immensely enjoy learning and applying my experience to unravel, comprehend and benefit from new ideas, technology, innovation and business models. In addition, living through multiple crises, tequila, Asia, dotcom, 9/11, the great recession and the Covid19 pandemia, plu ...

Group 1: Market Trends - The paper sector continues its upward trend, with Nine Dragons Paper (02689.HK) leading the gains, rising over 9% after announcing a price increase of 30 CNY/ton for corrugated paper and recycled cardboard starting August 1, reflecting an optimized supply-demand structure in the industry [1] - The brokerage sector saw collective strength, with major Chinese brokerages like Dongfang Securities (03958.HK) and Zhongyuan Securities (01375.HK) rising over 6% and 5% respectively, indicating significant capital inflow into the sector [1] - Urban Beauty (02298.HK) surged 13% as its online GMV for 2024 is projected to reach 1.57 billion CNY, marking a 100% year-on-year increase, showcasing the effectiveness of its new retail transformation [1] Group 2: Company Performance - China Duty Free Group (01880.HK) soared 17% after Macquarie's report indicated a narrowing year-on-year revenue decline from 19.5% in Q4 2024 to 11% in Q1 2025, with a stable gross margin of 33% [1] - The gaming sector experienced a broad increase, with companies like 澳博控股 (00880.HK) and 银河娱乐 (00027.HK) rising over 3%, supported by UBS data showing Macau's average daily gaming revenue in July at 683 million MOP, a 14% year-on-year increase [2] - 雍禾医疗 (02279.HK) saw a 13% increase after forming a strategic partnership with Meituan Health to build a medical-grade hair health service system [2] Group 3: Real Estate and Financing - The Hong Kong real estate sector collectively strengthened, with Country Garden (02007.HK) leading with nearly a 10% rise, driven by improved financing conditions as indicated by the People's Bank of China's report showing a recovery in real estate loan growth [3] - Meilan Airport (0357.HK) rose 10% as CITIC Securities highlighted the significance of Hainan's trade opening, which is expected to benefit the local tourism industry [3] Group 4: Gold Sector Decline - The gold sector faced pressure, with companies like 潼关黄金 (00340.HK) and 大唐黄金 (08331.HK) dropping over 4%, attributed to a decline in spot gold prices below 3,380 USD/oz, driven by reduced safe-haven appeal due to easing trade tensions [4] Group 5: US Market Highlights - Futu Holdings (FUTU.US) rose 2.82% after announcing a long-term strategic partnership with Huaxia Fund to promote the integration of traditional finance and blockchain technology [5] - Japanese automotive stocks surged, with Toyota (TM.US) and Honda (HMC.US) rising over 13% following news of a trade agreement reducing tariffs on Japanese cars [6] - Nuclear power stocks in the US saw significant gains, with Oklo Inc (OKLO.US) rising 9.21%, reflecting a growing interest in nuclear energy [5]

Group 1 - Talen Energy Corporation reported clearing 6,702 megawatts in the PJM Base Residual Auction for the 2026/2027 planning year at a price of $329.17 per megawatt-day, resulting in approximately $805 million in capacity revenues [1] - The planning year for the auction runs from June 1, 2026, to May 31, 2027 [1] - Talen Energy operates approximately 10.7 gigawatts of power infrastructure in the U.S., including 2.2 gigawatts of nuclear power and a significant fossil fleet [2] Group 2 - The company is positioned to serve the growing demand for reliable, clean power from artificial intelligence data centers [2] - Talen Energy is dedicated to generating power safely and reliably while delivering maximum value per megawatt produced [2]

Experience is difficult to learn. After 30 plus years of critically analyzing the nuts and bolts of businesses as diverse as airlines, oil, retail, mining to fintech and ecommerce plus the macro, monetary and political drivers. I continue to immensely enjoy learning and applying my experience to unravel, comprehend and benefit from new ideas, technology, innovation and business models. In addition, living through multiple crises, tequila, Asia, dotcom, 9/11, the great recession and the Covid19 pandemia, plu ...