Talen Energy Corporation

Good morning and welcome to the Talent Energy Corporation Quarter 2 2025 earnings call. I am Franz and I'll be the operator assisting you today. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session and if you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your questions, press star 1 again. Thank you. I would now like to turn the call over to Sergio Castro. Please go ahead.

Thank you, Franz. Welcome to Talent Energy's 2nd Quarter 2025 conference call. Speaking today, our Chief Executive Officer Mack McFarland and Chief Financial Officer Terry Nutt. They are joined by other talent senior executives to address questions during the second part of today's call as necessary. We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Talent's website, talentenergy.com. Today, we are making some forward-looking statements based on current expectations and assumptions. Actual results could differ due to risk factors and other considerations described in our financial disclosures and other SEC filings. Today's discussion also includes references to certain non-GAAP financial measures. We have provided information reconciling our non-GAAP measures to the most directly comparable GAAP measures in our earnings release and the appendix of our presentation. With that, I will now turn the call over to Mack.

Thank you, Sergio, and welcome everyone to our early morning call here. As always, we appreciate your continued interest in Talent Energy. It is shaping up to be quite a year in the IPP space, and we don't foresee things changing anytime soon. Thematically, all remains the same. AI continues to drive data center growth, and in fact, the hyperscalers continue to increase their capex plans year over year and quarter over quarter. Power markets continue to show signs of things getting tighter, driven by demand, and this includes both AEP and PPL increasing their backlog from data centers this quarter to new highs. And we believe there is more opportunity for talent to create value in this environment. That said, this is going to be a relatively routine earnings call for the second quarter, as we have had a flurry of activity recently behind us. In the second quarter, turning to slide two, we delivered adjusted EBITDA of $90 million and an adjusted free cash flow use of $78 million, which reflects the extended outage at Susquehanna. While we prefer to have our maintenance outages at Susquehanna or any of our fossil fleet units completely scripted down to hourly activity, we do account for discovery. And the work we discovered at Susquehanna enabled us to get increased megawatts out of Unit 2, and in fact, we are seeing 75 megawatts plus already. We will use what we have learned during this outage and incorporate similar work into next spring's Unit 1 outage, where we expect to extend the outage, but shorten the overall timeframe versus this spring, because now we can plan ahead, and we believe we will find similar levels of megawatt recovery. On June 11, we expanded and revamped our agreement with Amazon to a -the-meter arrangement for a total of 1.9 gigawatts, doubling the size of the original contract and eliminating regulatory uncertainty, a win for both us and AWS. And the collaboration between us continues to advance as the campus construction ramps up. As a subsequent event, we entered into agreements to purchase the Freedom Energy Center and Guernsey Power Plant, adding low-carbon, highly efficient CCGTs to our fleet and expanding our capability to serve large loads and enter into long-term contracts. Not to mention that these plants will add over 40% free cash flow per share accretion in 2016 and more than 50% for the following two years on a mostly merchant basis. Mostly merchant because the acquisition comes with a small hedge book and existing gas contracts. We are excited about adding these assets to our portfolio. We have filed FERC 203 applications for both plants, and we have filed requisite HSR filings as of today and are targeting close by the end of the year. As you may recall from our September Investor Day, our earnings in the second half of 2025 will be higher because they include three important factors. First, the 2025-26 capacity pricing. Second, the RMR impacts of our Brand and Shores and Wagner plants, which underscore our commitment to support grid reliability in Maryland. And third, the ramp up of the AWS contract. Terry will walk through this in more detail in a few minutes. With half of the year behind us, we are reaffirming 25 guidance. We will provide a further update on 2026 and our 2728 outlook at our investor update on September 9th. We are switching from an in-person meeting to a virtual for this event. And just to align expectations, we intend to provide guidance and outlooks taking into consideration the new plants and the recent tax benefit changes. You shouldn't expect some big deal announcement at this event. As you know, we don't work that way. That said, don't take my prior comments out of context. We are relentlessly and continuously focused on execution, and you'll be the first to know when we add to the Talon flywheel. Lastly, we were added to two Russell Equity Indices in June, driving passive fund demand for our stock and continued shareholder rotation. I am proud of what the team has accomplished to date while setting the stage for additional long-term value creation. As always, none of this is possible without the hard work of every employee at Talon. So I'd like to thank them for powering the future at Talon. I'll now turn the call over to Terry.