Talen Energy Supply (TLN) | Credit Investor

Next 12 Months: Starting Case

$ in millions	Last 12 Months	Next Quarter (4Q26E)	vs. 4Q25A	Next 12 Months	Change
Revenue	$4,874	$804	7.4%	$5,026	3.1%
Adj. EBITDA	$1,100	($11)	(104.9%)	$1,252	13.8%
Free Cash Flow	$396	($294)	(215.9%)	($19)	(104.7%)
Net Debt, end of period	$9,234	$9,528		$9,253	0.2%
Net Debt / Adj. EBITDA	8.4x	11.1x		7.4x	-1.0x
Total Liquidity, end of period	$1,685	$1,391		$1,666	(1.1%)

The credit over the next year

Talen now carries about $9.6 billion of debt after buying Freedom, Guernsey and the Cornerstone plants, and the plan to get from roughly 4.3x net leverage on 2026 guidance toward the 3.5x target rests on 2027 Adjusted EBITDA of $2.5 to $2.85 billion. Capacity revenue is largely set by cleared PJM auctions at about $325 to $333 per MW-day through May 2029, so the swing factors are the unhedged 30% of 2027 output, where each $1/MWh on PJM power is worth about $37 million a year, and how hard the much larger gas fleet runs. The October 2026 sale of 2027/28 and 2028/29 capacity cash flows for $1.3 billion net means those years will book capacity revenue without the matching cash, which matters more to free cash flow and debt paydown than to EBITDA.

Leverage falls from 8.4x to 7.4x over the next four quarters on the starting case.
The company burns $19mm of cash over the next year on the starting case, so liquidity has to fund it.
Net debt is roughly unchanged from $9.23bn to $9.25bn.
Liquidity a year out is $1.67bn, against $1.69bn today.
Company guidance for fiscal 2026: adjusted EBITDA of $2.05bn to $2.20bn on its own definition, free cash flow of $1.23bn to $1.33bn.

Built from the inputs on the Projections tab of the model; change them there. A starting case from history, not a forecast.

Capital Structure

Cap Structure	Amt Out.	Mkt Price	Yield	Lev. Through	View
Unrestricted Cash	$335.0
Revolving Credit Facility (RCF)	0.0	100.0%	N/a	0.0x	Neutral
TLB-2 Senior Secured Term Loan B due 2031	835.0	100.0%	N/a	0.8x	Neutral
TLB-3 Senior Secured Term Loan B due 2032	1,191.0	100.0%	N/a	1.8x	Neutral
TLB-1 Senior Secured Term Loan B due 2032	842.0	100.0%	N/a	2.6x	Neutral
6.125% Senior Notes due 2031	1,500.0	99.7%*	6.21%	4.0x	Neutral
6.375% Senior Notes due 2033	2,500.0	98.7%*	6.62%	6.2x	Neutral
6.250% Senior Notes due 2034	1,400.0	98.2%*	6.56%	7.5x	Neutral
6.500% Senior Notes due 2036	1,290.0	98.1%*	6.78%	8.7x	Neutral
PEDFA Series 2009C Exempt Facilities Revenue Refunding Bonds	81.0	100.0%	5.25%	8.8x	Bearish
PEDFA Series 2009B Exempt Facilities Revenue Refunding Bonds	50.0	100.0%	5.25%	8.8x	Bearish
Total Debt	$9,569.0			8.7x
Net Debt	$9,234.0			8.4x

Last Twelve Months

Revenue	$4,874
Implied Costs	(3,774)
Adj. EBITDA	$1,100
(-) Interest Expense	(392)
(-) Capex	(374)
Memo: FCF	$396
Total Liquidity	$1,685.0

Next 12 months, starting case▲ Revenue $4.87bn → $5.03bn▲ Adj. EBITDA $1.10bn → $1.25bn▼ Free cash flow $396mm → -$19mm▼ Net leverage 8.4x → 7.4x▶ Liquidity $1.69bn → $1.67bn

Talen Energy Supply

			9/30/26						Face Value / Adj. EBITDA
Cap Structure	Coupon	Maturity	Amt Out.	Mkt Price	YTM	Next Call	Yield to Call	View	2014A	2015A	2022A	2024A	2025A	LTM	3Q27E LTM	3Q28E LTM
Unrestricted Cash			$335.0
Undrawn Revolver ($1,350mm facility)			1,350.0
Total Liquidity			$1,685.0

Revolving Credit Facility (RCF)	S + 150	12/20/2029	0.0	100.0%	N/a	N/a	N/a	Neutral
TLB-2 Senior Secured Term Loan B due 2031	S + 175	12/13/2031	835.0	100.0%	N/a	N/a	N/a	Neutral
TLB-3 Senior Secured Term Loan B due 2032	S + 200	11/25/2032	1,191.0	100.0%	N/a	N/a	N/a	Neutral
TLB-1 Senior Secured Term Loan B due 2032	S + 175	11/25/2032	842.0	100.0%	N/a	N/a	N/a	Neutral
Total Secured Debt			$2,868.0						7.2x	6.5x	2.3x	5.1x	4.0x	2.6x	2.3x	2.3x
Net Secured Debt			$2,533.0						6.4x	5.7x	2.0x	4.5x	3.5x	2.3x	2.0x	2.0x

6.125% Senior Notes due 2031	6.125%	5/1/2031	1,500.0	99.7%*	6.21%	5/1/2028 @ 103.062	8.31%	Neutral
6.375% Senior Notes due 2033	6.375%	5/1/2033	2,500.0	98.7%*	6.62%	5/1/2029 @ 103.188	8.12%	Neutral
6.250% Senior Notes due 2034	6.25%	2/1/2034	1,400.0	98.2%*	6.56%	10/15/2028 @ 103.125	8.72%	Neutral
6.500% Senior Notes due 2036	6.50%	2/1/2036	1,290.0	98.1%*	6.78%	10/15/2030 @ 103.25	7.77%	Neutral
PEDFA Series 2009C Exempt Facilities Revenue Refunding Bonds	5.25%	N/a	81.0	100.0%	N/a	6/1/2026 @ 100	5.25%	Bearish
PEDFA Series 2009B Exempt Facilities Revenue Refunding Bonds	5.25%	N/a	50.0	100.0%	N/a	6/1/2026 @ 100	5.25%	Bearish
Other debt, discounts and issuance costs	N/a	N/a	(120.0)
Total Debt			$9,569.0						24.1x	21.6x	7.7x	17.1x	13.4x	8.7x	7.6x	7.6x
Net Debt			$9,234.0						23.3x	20.8x	7.4x	16.5x	12.9x	8.4x	7.4x	7.4x
						Adj. EBITDA			$397	$444	$1,249	$558	$715	$1,100	$1,252	$1,252

Key Financials

	2014A	2015A	2022A	2024A	2025A	LTM	3Q27E LTM	3Q28E LTM
Revenue	--	--	$3,209	$2,115	$2,581	$4,874	$5,026	$5,026
Y/Y Growth				(34.1%)	22.0%		3.1%	0.0%
Implied Costs	--	--	(1,960)	(1,557)	(1,866)	(3,774)	(3,774)	(3,774)
Adj. EBITDA	$397	$444	$1,249	$558	$715	$1,100	$1,252	$1,252
Margin			38.9%	26.4%	27.7%	22.6%	24.9%	24.9%
(-) Restructuring and other cash add-backs	--	--	(488)	--	--	--	--	--
Cash EBITDA	$397	$444	$761	$558	$715	$1,100	$1,252	$1,252
(-) Interest Expense (Cash Only)	(122)	(169)	(277)	(255)	(233)	(392)	(884)	(884)
(-) Cash Taxes	(310)	(5)	(14)	(20)	(71)	(1)	(1)	(1)
(-) Capex	(416)	(451)	(232)	(85)	(98)	(374)	(386)	(386)
(+/-) Working Capital and Other	497	498	(283)	(27)	293	63	--	--
Memo: FCF	$46	$317	($45)	$171	$606	$396	($19)	($19)
% of Debt	0.5%	3.3%	(0.5%)	1.8%	6.3%	4.1%	(0.2%)	(0.2%)

Liquidity

Unrestricted Cash	$335.0
Undrawn Revolver	1,350.0
Total Liquidity	$1,685.0
(-) Debt due through 2028	-0.0
(+/-) Free cash flow, last twelve months	396.0
Liquidity after maturities and a year of cash flow	$2,081.0

Tranches are from the debt table in the latest quarterly or annual report.Blue figures are inputs in the model. Price is 100% of face unless marked *, which is a bond fund's own valuation from its SEC holdings report, not a traded price.Secured and unsecured are judged from each instrument's name. Adj. EBITDA is operating income plus D&A, stock compensation, restructuring and impairment charges as tagged in SEC filings; it is not the company's own adjusted figure. Free cash flow is cash from operations less capital spending.

The basket review for this company has not finished yet. When it does, this tab shows the dollar capacity to move value or prime lenders, the playbook moves that fit, and what they would do to each tranche. Meanwhile, see the liability management playbook.

Key Financials

	2014A	2015A	2022A	2024A	2025A	LTM	3Q27E LTM	3Q28E LTM
Revenue	--	--	$3,209	$2,115	$2,581	$4,874	$5,026	$5,026
Y/Y Growth				(34.1%)	22.0%		3.1%	0.0%
Implied Costs	--	--	(1,960)	(1,557)	(1,866)	(3,774)	(3,774)	(3,774)
Adj. EBITDA	$397	$444	$1,249	$558	$715	$1,100	$1,252	$1,252
Margin			38.9%	26.4%	27.7%	22.6%	24.9%	24.9%
(-) Restructuring and other cash add-backs	--	--	(488)	--	--	--	--	--
Cash EBITDA	$397	$444	$761	$558	$715	$1,100	$1,252	$1,252
(-) Interest Expense (Cash Only)	(122)	(169)	(277)	(255)	(233)	(392)	(884)	(884)
(-) Cash Taxes	(310)	(5)	(14)	(20)	(71)	(1)	(1)	(1)
(-) Capex	(416)	(451)	(232)	(85)	(98)	(374)	(386)	(386)
(+/-) Working Capital and Other	497	498	(283)	(27)	293	63	--	--
Memo: FCF	$46	$317	($45)	$171	$606	$396	($19)	($19)
% of Debt	0.5%	3.3%	(0.5%)	1.8%	6.3%	4.1%	(0.2%)	(0.2%)

Key Drivers

Driver	4Q25A	1Q26A	2Q26A	3Q26A	4Q26E	1Q27E	2Q27E	3Q27E	4Q27E	1Q28E	2Q28E	3Q28E	Sensitivity	Next 12m impact ($mm)
Total generation TWh per quarter	11.7	15.6	14.1	23.9	11.7	15.6	14.1	23.9	11.7	15.6	14.1	23.9	$49.7mm on revenue	--
PJM West Hub day-ahead on-peak power price $ per MWh, quarterly settled average	66.10	102.98	65.58	100.51	66.10	102.98	65.58	100.51	66.10	102.98	65.58	100.51	$9.3mm on revenue	--
TETCO M-3 natural gas price $ per MMBtu, quarterly settled average	3.60	9.61	2.15	1.88	3.60	9.61	2.15	1.88	3.60	9.61	2.15	1.88	$135.0mm on cost of revenue	--
PJM capacity price (MAAC and PPL) $ per MW-day, quarter average of the delivery-year price	269.92	269.92	289.67	329.17	329.17	329.17	330.59	333.44	333.44	333.44	330.63	325.00	$0.9mm on revenue	152
Realized energy margin per MWh $ per MWh (energy and other revenues less fuel and energy purchases, divided by generation)	30.6	30.2	25.9	23.5	30.6	30.2	25.9	23.5	30.6	30.2	25.9	23.5	$23.9mm on revenue	--

Talen now carries about $9.6 billion of debt after buying Freedom, Guernsey and the Cornerstone plants, and the plan to get from roughly 4.3x net leverage on 2026 guidance toward the 3.5x target rests on 2027 Adjusted EBITDA of $2.5 to $2.85 billion. Capacity revenue is largely set by cleared PJM auctions at about $325 to $333 per MW-day through May 2029, so the swing factors are the unhedged 30% of 2027 output, where each $1/MWh on PJM power is worth about $37 million a year, and how hard the much larger gas fleet runs. The October 2026 sale of 2027/28 and 2028/29 capacity cash flows for $1.3 billion net means those years will book capacity revenue without the matching cash, which matters more to free cash flow and debt paydown than to EBITDA.

Bottoms-Up Projections: starting case

$ in millions	4Q25A	1Q26A	2Q26A	3Q26A	4Q26E	1Q27E	2Q27E	3Q27E	4Q27E	1Q28E	2Q28E	3Q28E
Revenue	$749	$1,568	$894	$1,663	$804	$1,623	$932	$1,667	$808	$1,627	$932	$1,659
Y/Y Growth	60.4%	139.8%	41.9%	104.8%	7.4%	3.5%	4.3%	0.2%	0.5%	0.2%	0.0%	(0.5%)
Adj. EBITDA	$234	$301	$101	$464	($11)	$523	$224	$517	($7)	$527	$224	$510
Margin	31.2%	19.2%	11.3%	27.9%	(1.4%)	32.2%	24.0%	31.0%	(0.9%)	32.4%	24.0%	30.7%
Free Cash Flow	$254	$419	($573)	$296	($294)	$177	($69)	$168	($291)	$180	($69)	$161
Cash, end of period	689	1,025	231	335	41	217	148	316	26	206	137	298
Total Debt, end of period	6,811	6,807	9,572	9,569	9,569	9,569	9,569	9,569	9,569	9,569	9,569	9,569
Net Debt / Adj. EBITDA	8.7x	5.6x	9.6x	8.4x	11.1x	8.7x	7.9x	7.4x	7.6x	7.4x	7.5x	7.4x

Revenue is built from one revenue line, each driven by volume and by price and mix against the same quarter a year earlier. Every cost line, interest, taxes, capital spending and working capital has its own input on the Projections tab of the model. This is a starting case built from history, not a forecast.

Earnings call: Q3 2026 · Nov 3, 2026

Slides Investor relations site

Talen nearly doubled Q3 Adjusted EBITDA to $669 million on acquired plants and higher PJM prices, held 2026 guidance, set higher 2027 guidance, and launched a $1.5 billion accelerated buyback.

Takeaways

Q3 Adjusted EBITDA rose to $669 million from $363 million a year earlier. Drivers were the acquired Cornerstone plants, higher realized power prices and volumes, and higher capacity revenue.
Q3 Adjusted Free Cash Flow was $433 million, up from $223 million, despite higher cash interest on acquisition debt. Nine-month free cash flow was $995 million.
GAAP net income fell to $138 million from $207 million. The cause was unrealized hedge losses and interest expense of $148 million, more than double last year.
Long-term debt rose to about $9.5 billion at September 30 from $6.8 billion at year end, reflecting acquisition financing. Management restated a 3.5x net debt to Adjusted EBITDA target.
Liquidity was about $1.6 billion on October 30: $220 million of cash plus $1.4 billion of undrawn revolver.
The $1.5 billion ASR was funded by $1.3 billion of net proceeds from selling future PJM capacity cash flows for the 2027/28 and 2028/29 years, plus cash. That trades future contracted cash for buybacks now.

Debt and capital

Share repurchase program upsized to $3.0 billion through 2028, including the $1.5 billion ASR. About 3.8 million shares were delivered and retired on October 1, with final settlement by Q1 2027.
A further 600,000 shares were bought in Q3 for about $204 million outside the ASR. About $1.5 billion of authorization will remain after the ASR.
Net leverage target restated at 3.5x net debt to Adjusted EBITDA.
Long-term debt was $9.54 billion plus $29 million due within one year at September 30, 2026. Accrued interest rose to $169 million.
Monetized about $1.5 billion of future PJM capacity cash flows for $1.3 billion of net proceeds.

Guidance

2026 Adjusted EBITDA held at a $2,050 to $2,200 million range. The midpoint was kept and the range narrowed from $2,025 to $2,225 million.
2026 Adjusted Free Cash Flow held at a $1,225 to $1,325 million range, narrowed from $1,200 to $1,350 million.
New 2027 guidance: Adjusted EBITDA of $2,500 to $2,850 million and Adjusted Free Cash Flow of $1,500 to $1,750 million. That is about 26% and 27% growth at the midpoints.
Hedged about 80% of expected generation for the rest of 2026, about 70% for 2027 and about 35% for 2028.

Tone: Confident and focused on shareholder returns, with buybacks framed as the main use of cash while leverage stays near the stated target.

Q2 2026Slides
Q1 2026Slides
Q4 2025Slides

Summary written with AI from Press release only. Talen does not file earnings slides with its results 8-K, no company-published transcript was found, and the IR site refused automated access, so the call itself was not reviewed.. Slides, audio and any transcript are the company's and open on its own site. Full transcripts from transcript vendors are not reproduced here.

Last quarter: Third quarter 2026

Adjusted EBITDA nearly doubled to $669mm on acquired plants, and 2026 guidance was narrowed around an unchanged midpoint.

Results

Adjusted EBITDA was $669mm, up from $363mm a year earlier.
Adjusted Free Cash Flow was $433mm, up from $223mm.
Operating revenues were $1,327mm versus $812mm, after a $183mm unrealized loss on derivatives.
Net income fell to $138mm from $207mm, mainly on mark-to-market losses on hedges and higher interest cost.
Generation rose to 23.9 TWh from 11.1 TWh, with a 75.4% capacity factor.

Why

Plants bought in the Cornerstone acquisition added most of the growth; the purchase used $2,569mm of cash in the first nine months.
Higher settled power prices, more output and higher PJM capacity revenue also helped.
Interest expense rose to $148mm from $67mm because of acquisition debt, and cash interest paid was $149mm.

Balance sheet and guidance

Long-term debt was $9,540mm plus $29mm due within a year at September 30, up from $6,782mm at year end after $4.0bn of new debt.
Cash was $335mm at quarter end; liquidity on October 30 was about $1.6bn, with $220mm of cash and $1.4bn of revolver capacity.
The company sold about $1.5bn of future PJM capacity cash flows for net $1.3bn and used it, with cash, to fund a $1.5bn share buyback.
2026 Adjusted EBITDA narrowed to $2,050mm to $2,200mm from $2,025mm to $2,225mm, midpoint held.
2026 Adjusted Free Cash Flow narrowed to $1,225mm to $1,325mm from $1,200mm to $1,350mm, midpoint held.
2026 net capital expenditures guided to $325mm to $335mm.
First 2027 guidance: Adjusted EBITDA $2,500mm to $2,850mm and Adjusted Free Cash Flow $1,500mm to $1,750mm.

What to watch

Cash and liquidity after the buyback: cash was $220mm in late October and the $1.5bn ASR settles by the first quarter of 2027, with $1.5bn more authorized through 2028.
The capacity monetization means part of 2027 to 2029 PJM capacity revenue has already been sold, so check how it is treated in EBITDA, cash flow and debt.
Derivative liabilities rose to $617mm current and $243mm noncurrent, and 2027 is about 70% hedged, leaving the rest exposed to PJM prices.

From the company's press release filed Nov 3, 2026. Figures in this section are as the company reports them, including its own adjusted EBITDA.

Filings

Earnings releases 8

Nov 3, 20268-K for Nov 3, 2026: Results · Press release
Aug 5, 20268-K for Aug 5, 2026: Results · Press release
May 5, 20268-K for May 5, 2026: Results · Press release
Feb 26, 20268-K for Feb 26, 2026: Results · Press release
Nov 5, 20258-K for Nov 5, 2025: Results · Press release
Aug 7, 20258-K for Aug 7, 2025: Results · Press release
May 8, 20258-K for May 8, 2025: Results · Press release
Feb 27, 20258-K for Feb 27, 2025: Results · Press release

Annual reports (10-K) 3

Quarterly reports (10-Q) 12

Current reports (8-K) 20

Sep 29, 20268-K for Sep 25, 2026: Director or officer change; Regulation FD; Other event
Jul 14, 20268-K for Jul 14, 2026: Regulation FD
Jun 15, 20268-K for Jun 15, 2026: Material agreement; Acquisition or disposal completed; New debt; Equity sold; Regulation FD
May 21, 20268-K for May 20, 2026: Material agreement
May 7, 20268-K for May 5, 2026: Shareholder vote
Apr 17, 20268-K for Apr 17, 2026: Other event
Jan 15, 20268-K for Jan 15, 2026: Material agreement; Equity sold; Regulation FD
Dec 17, 20258-K for Dec 17, 2025: Regulation FD
Dec 15, 20258-K for Dec 9, 2025: Director or officer change; Regulation FD
Nov 25, 20258-K for Nov 25, 2025: Material agreement; Acquisition or disposal completed; New debt; Regulation FD
Oct 27, 20258-K for Oct 27, 2025: Material agreement; New debt; Regulation FD
Oct 10, 20258-K for Oct 10, 2025: Regulation FD
Oct 10, 20258-K for Oct 9, 2025: Regulation FD; Other event
Oct 6, 20258-K for Oct 6, 2025: Regulation FD
Sep 9, 20258-K for Sep 8, 2025: Regulation FD; Other event
Jul 22, 20258-K for Jul 22, 2025: Regulation FD
Jul 17, 20258-K for Jul 17, 2025: Material agreement; Regulation FD
Jun 11, 20258-K for Jun 11, 2025: Regulation FD; Other event
May 19, 20258-K for May 19, 2025: Regulation FD
May 12, 20258-K for May 12, 2025: Director or officer change; Shareholder vote

Proxy statements 3

Other filings 8

Mar 19, 2025424B3
Feb 28, 2025424B3
Jan 14, 2025424B3
Jan 7, 2025424B3
Dec 20, 2024424B3
Dec 13, 2024424B3
Nov 14, 2024424B3
Aug 13, 2024424B3

Links open the document on SEC EDGAR. Earnings call transcripts are not SEC filings and belong to their publishers, so they are not reproduced here; the press release and slides filed with each results 8-K are.

Rating actions

Jul 18, 2025Moody's: Ba3 CFR and Ba2 secured ratings placed on review for downgrade. The debt-funded purchase of the Freedom and Guernsey gas plants was expected to raise leverage. · source

Coming up

Feb 25, 2027Results. Full-year results for the period ending 2026-12-31. The date is an estimate: last year's filing date moved forward a year.

Recent 8-K filings

Nov 3, 2026Reported results
Sep 29, 2026Director or officer change; Regulation FD disclosure; Other event
Aug 5, 2026Reported results
Jul 14, 2026Regulation FD disclosure