Third quarter 2026
Filed Nov 3, 2026Talen Energy Reports Third Quarter 2026 Results, Reaffirms 2026 Guidance, and Introduces 2027 Guidance
Third-quarter Adjusted EBITDA increased by $306 million to $669 million and Adjusted Free Cash Flow increased by $210 million to $433 million, while the company reaffirmed 2026 guidance and introduced higher 2027 Adjusted EBITDA and Adjusted Free Cash Flow ranges. GAAP Net Income (Loss) Attributable to Stockholders decreased by $(69) million to $138 million.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 Energy and other revenuesGAAP | $1.19B | – | – |
| Q3 2026 Capacity revenuesGAAP | 323 | – | – |
| Q3 2026 Unrealized gain (loss) on derivative instruments, operating revenuesGAAP | (183) | – | – |
| Q3 2026 Operating RevenuesGAAP | 1,327 | – | – |
| Q3 2026 Fuel and energy purchasesGAAP | (626) | – | – |
| Q3 2026 Nuclear fuel amortizationGAAP | (27) | – | – |
| Q3 2026 Unrealized gain (loss) on derivative instruments, energy expensesGAAP | (7) | – | – |
| Q3 2026 Energy ExpensesGAAP | (660) | – | – |
| Q3 2026 Operation, maintenance and development expenseGAAP | (167) | – | – |
| Q3 2026 General and administrative expenseGAAP | (76) | – | – |
| Q3 2026 Depreciation, amortization and accretionGAAP | (157) | – | – |
| Q3 2026 Other operating income (expense), netGAAP | (12) | – | – |
| Q3 2026 Operating Income (Loss)GAAP | 255 | – | – |
| Q3 2026 Interest expense and other finance chargesGAAP | (148) | – | – |
| Q3 2026 Income (Loss) Before Income TaxesGAAP | 195 | – | – |
| Q3 2026 Income tax benefit (expense)GAAP | (57) | – | – |
| Q3 2026 Net Income (Loss) Attributable to StockholdersGAAP | $138M | – | decreased by $(69) million |
| Q3 2026 Net Income (Loss) Attributable to Stockholders per common share, basicGAAP | $ 2.90 | – | – |
| Q3 2026 Net Income (Loss) Attributable to Stockholders per common share, dilutedGAAP | $ 2.88 | – | – |
| Q3 2026 Adjusted EBITDAnon-GAAP | $669M | – | increased by $306 million |
| Q3 2026 Adjusted Free Cash Flownon-GAAP | $433M | – | increased by $210 million |
| Q3 2026 Total Generation (TWh)other | 23.9 | – | – |
| Q3 2026 Capacity Factorother | 75.4% | – | – |
| Nine months 2026 Operating RevenuesGAAP | 3,203 | – | – |
| Nine months 2026 Operating Income (Loss)GAAP | 393 | – | – |
| Nine months 2026 Net Income (Loss) Attributable to StockholdersGAAP | $109M | – | – |
| Nine months 2026 Net Income (Loss) Attributable to Stockholders per common share, basicGAAP | $ 2.35 | – | – |
| Nine months 2026 Net Income (Loss) Attributable to Stockholders per common share, dilutedGAAP | $ 2.33 | – | – |
| Nine months 2026 Adjusted EBITDAnon-GAAP | $1.52B | – | – |
| Nine months 2026 Adjusted Free Cash Flownon-GAAP | $995M | – | – |
| Nine months 2026 Total Generation (TWh)other | 53.5 | – | – |
| Nine months 2026 Capacity Factorother | 64.3% | – | – |
| Nine months 2026 Net cash provided by (used in) operating activitiesGAAP | 490 | – | – |
| Nine months 2026 Property, plant and equipment expendituresGAAP | (348) | – | – |
| Nine months 2026 Net cash provided by (used in) investing activitiesGAAP | (2,963) | – | – |
| Nine months 2026 Share repurchasesGAAP | (502) | – | – |
| Nine months 2026 Net cash provided by (used in) financing activitiesGAAP | 2,070 | – | – |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
2026E and 2027E outlook
- Note2026E Adjusted EBITDA: $2,050 - $2,200
- Note2026E Adjusted Free Cash Flow: $1,225 - $1,325
- Note2027E Adjusted EBITDA: $2,500 - $2,850
- Note2027E Adjusted Free Cash Flow: $1,500 - $1,750
- Note2026E Net Income (Loss): $ 960 - $ 1,080
- Note2027E Net Income (Loss): $ 1,105 - $ 1,405
- Note2026E capital expenditures, net: $ (325) - $ (335)
- Note2027E capital expenditures, net: $ (355) - $ (385)
- Note2026E interest and finance charge payments: (460) - (480)
- Note2027E interest and finance charge payments: (585) - (615)
- Note2026E income taxes: (15) - (25)
- Note2027E income taxes: (50) - (70)
- Note2026E pension contributions: (25) - (35)
- Note2027E pension contributions: (10) - (30)
- NoteFigures are rounded to the nearest $5 million.
Capital returns
- 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.
- 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.
- 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.
What drove it
- Adjusted EBITDA increased 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 primarily due to the contribution of acquired generation facilities, higher settled power prices and generation volumes (net of realized hedges), and higher capacity revenues.
- As of September 30, 2026, including the impact of the Nuclear Production Tax Credit, Talen had hedged approximately 80% of expected generation volumes for October - December 2026, approximately 70% for 2027 and approximately 35% for 2028.
- The 2027 guidance reflects strong PJM fundamentals and a full year of contributions from recently acquired assets.
Concerns
- GAAP Net Income (Loss) Attributable to Stockholders decreased by $(69) million, with unrealized mark-to-market losses on commodity derivative contracts and increased interest expense associated with acquisition financings outweighing favorable operating factors.
- Q3 2026 unrealized gain (loss) on derivative instruments within operating revenues was (183), compared with 42 in Q3 2025.
- Interest expense and other finance charges were (148) in Q3 2026, compared with (67) in Q3 2025.
- The capacity monetization agreement sells rights to approximately $1.5 billion in future PJM capacity cash flows for the 2027/2028 and 2028/2029 PJM capacity years.
What to watch
- Completion of the $1.5 billion ASR, which is expected to be completed no later than the first quarter of 2027.
- Execution against the reaffirmed 2026 Adjusted EBITDA range of $2,050 - $2,200 and Adjusted Free Cash Flow range of $1,225 - $1,325.
- Delivery of the introduced 2027 Adjusted EBITDA range of $2,500 - $2,850 and Adjusted Free Cash Flow range of $1,500 - $1,750.
- Future settled power prices, generation volumes net of realized hedges, capacity revenues, and cash interest payments associated with acquisition financings.
- The progression of hedge coverage from approximately 80% for October - December 2026 to approximately 70% for 2027 and approximately 35% for 2028.
Balance sheet and cash flow
- As of September 30, 2026, cash and cash equivalents were $ 335, compared with $ 689 as of December 31, 2025.
- As of September 30, 2026, long-term debt, due within one year was $ 29 and long-term debt was 9,540.
- 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.
- Net cash provided by (used in) operating activities for the nine months ended September 30, 2026 was 490, compared with 424 for the nine months ended September 30, 2025.
- Net cash provided by (used in) investing activities for the nine months ended September 30, 2026 was (2,963), including Cornerstone Acquisition, net of (2,569).
- Net cash provided by (used in) financing activities for the nine months ended September 30, 2026 was 2,070, including debt issuances of 4,000, debt repayments of (1,222), and share repurchases of (502).
- 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.
- The Company is focused on maintaining its net leverage target of 3.5x net debt-to-Adjusted EBITDA.
Analysis
Talen reported Q3 2026 Operating Revenues of 1,327, compared with 812 in Q3 2025. Energy and other revenues were $ 1,187 versus $ 604, and capacity revenues were 323 versus 166. Total Generation was 23.9 TWh, compared with 11.1 TWh, while Capacity Factor was 75.4%, compared with 56.6%. Management attributed the Adjusted EBITDA improvement to acquired generation facilities, higher settled power prices and generation volumes net of realized hedges, and higher capacity revenues.
Q3 Adjusted EBITDA was $ 669, compared with $ 363, and Adjusted Free Cash Flow was $ 433, compared with $ 223. GAAP Net Income (Loss) Attributable to Stockholders was $ 138, compared with $ 207, and diluted earnings per share were $ 2.88, compared with $ 4.25. The release said favorable operating contributions were outweighed in GAAP earnings by unrealized mark-to-market losses on commodity derivative contracts and increased interest expense associated with acquisition financings. Q3 interest expense and other finance charges were (148), compared with (67).
For the nine months ended September 30, 2026, Adjusted EBITDA was $ 1,516 versus $ 653 and Adjusted Free Cash Flow was $ 995 versus $ 232. Net cash provided by operating activities was 490, compared with 424. Investing cash flow was (2,963), including Cornerstone Acquisition, net of (2,569), while financing cash flow was 2,070, including debt issuances of 4,000, debt repayments of (1,222), and share repurchases of (502).
Capital allocation centered on the $1.5 billion ASR and the upsized $3.0 billion SRP. Talen received and retired approximately 3.8 million shares under the ASR on October 1, 2026, and separately repurchased 600,000 shares for approximately $204 million during Q3. The ASR was funded with net proceeds of $1.3 billion from the capacity monetization and cash on hand. The monetization sold rights to approximately $1.5 billion in future PJM capacity cash flows for the 2027/2028 and 2028/2029 PJM capacity years.
The company reaffirmed 2026 Adjusted EBITDA guidance of $2,050 - $2,200 and Adjusted Free Cash Flow guidance of $1,225 - $1,325. It introduced 2027 Adjusted EBITDA guidance of $2,500 - $2,850 and Adjusted Free Cash Flow guidance of $1,500 - $1,750. The release described those ranges as representing approximately 26% and 27% growth at the midpoints compared with 2026 guidance. Hedge coverage was approximately 80% for October - December 2026, approximately 70% for 2027, and approximately 35% for 2028, including the impact of the Nuclear Production Tax Credit.
Management, verbatim
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.
Mac McFarland, Chief Executive Officer
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.
Terry Nutt, President
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, President
Not in the filing
stated, not guessed- Prior-period outlook was not provided, so no comparison of actual results with prior guidance is available.
- Revenue guidance was not reported.
- Gross margin and gross-margin guidance were not reported.
- Operating-expense guidance was not reported.
- Tax-rate guidance was not reported.
- Business-segment revenue disclosures were not reported.
- Quarterly operating cash flow and quarterly GAAP free cash flow were not reported.
- Dividend declarations or payments were not reported.
- A prior-quarter comparison was not reported for the listed operating metrics.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.