Talen Energy Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Talon Energy Corporation fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star 11 on your telephone. You would then hear an automated message advising your hand is raised. we ask that you limit to one question and one follow-up. And to withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Sergio Castro, Vice President and Treasurer. Please go ahead.

Thank you, Michelle. And welcome to Talent Energy's fourth quarter 2025 conference call. Speaking today, our Chief Executive Officer, Mac McFarland, President Terry Nutt, and Chief Financial Officer Cole Muller. They are joined by other Talon senior executives to address questions during the second part of today's call, as necessary. We issued our earnings relief this afternoon, along with a presentation, all of which can be found in the investor relations section of Talon's website, talonenergy.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 SPC 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. And with that, I will now turn the call over to Mac.

Great. Thanks, Sergio, and welcome, everyone, to today's call. As always, we appreciate your ongoing interest in talent and participation in our calls. We closed out the full year 2025 with strong results in Q4, adding the Freedom and Guernsey assets and operating well during the early winter in December. And 2026 is starting off the same with overall strong performance by the fleet and the commercial teams during the cold winter months. And I've mentioned that PGM and other operators also performed well, maintaining grid reliability during some of the highest day-after-day loads we have seen. We saw a fair amount of elevated prices and volatility, and all in all, 2026 is off to a good start, and we are reaffirming our 2026 guidance range. Just recall that that range does not include the recently announced cornerstone acquisition that we anticipate closing this summer. As I reflect back on 2025, we said it was going to be an exciting year, and it was across the IPP space, and a talent we accomplished a lot. We signed the reliability must-run agreements. We signed a revamped and doubled front-of-the-meter PPA with Amazon at Susquehanna. We signed and closed Freedom & Guernsey, and we delivered on the basics of being an IPP, which is safely, reliably, and profitably delivering megawatts to the grid. Thanks to all the talent employees that make this possible. Looking forward to 2026, we are optimistic about the continued long arc of the Powering AI thesis and talent's position in it. As I've been saying, 2025 was a year of option development, and 2026 will be the year of rationalization. In 2025, as everyone in the space was racing to develop options for data center development and the associated power, a bow wave of expectations built across the industry for deals and more deals, whether they were virtual purchase power agreements or behind-the-meter developments. Investors were anticipating the next big thing and the next big announcement. To some, 2025 fell short. For others that grasp this long arc, they believe things will rationalize themselves out. Some projects will simply not make it and others will. Some will be delayed and will need to be rationalized in 2027. But overall, we believe the long arc remains unchanged. As the CEO of Anthropic wrote in his recent essay, and I quote, every few months public sentiment either becomes convinced that AI is hitting a wall or becomes excited about some new breakthrough that will, fundamentally changed the game. But the truth is that behind the volatility and public speculation, there has been a smooth, unyielding increase in AI's cognitive capabilities. Again, that's a quote from the CEO of Anthropic. From my perspective, you could replace AI in that quote with IPPs or replace AI with talent itself, and the quote would keep its same meaning It is what I mean when I say the long arc. Our capabilities to power data centers and AI have had a smooth, unyielding increase. That said, there has been a lot of near-term noise that can be conflated with the rational long arc view. Reliability backstop option, overbuild, resource adequacy, regulated new build, behind the meter, front of the meter, local zoning. They are each relevant in their own sense. interrelated in some sense, and when taken all together, culminate in a vastness of noise. Noise that can be misunderstood or worse yet, turned into something that it is not. But when taken in reality, they don't change the long arc and we remain committed to our talent fly real strategy. For investors, please know that we manage to this long arc and seek to maximize long-term value creation and not to short-term events. We do not over-rotate. Nothing has changed our fundamental view that data centers are coming, coming at a rapid pace, we have the ability to contract with these entities across our fleet, we are building a further diversified fleet to support those contracts, and we are building capabilities to contribute to the addition of new builds. With respect to Montour, what is our plan B? That is and remains the question asked by many. I see this situation analogous to the ISA denial and the questions after the FERC decision about our initial plans at Susquehanna. But what did we do? We stayed flexible. We retooled and ultimately pivoted to a better commercial solution. We remain confident that we can do the same in this instance, too. Short-term hurdles do not define long-term success. How you respond to them does. And so, therefore, we press on. Of course, Montour is just one opportunity we have in our pipeline, albeit the most well-known, and that is likely my fault for talking about it too much. We have numerous other organic and inorganic sites we are developing across the PGM footprint to further implement the Talon Flywheel. This includes both powered land opportunities as well as new build opportunities. And I know many of you will want to dig into this pipeline of opportunities, but before you ask about them, let me say this. We will not discuss them at any level of detail. and we no longer plan to discuss development in the public forum and repeat the frenzied speculation that ensued around one decision by Montour County Commissioners. But you can be rest assured knowing that we are working the pipeline every day and have options at our disposal. On the regulatory front, we are engaging with policymakers at both the state, federal, and RTO level to bring about the Reliability Backstop Procurement, or RBP, formerly the RBA, in PJM that provides for a one-time solution to resource adequacy, which will minimize the cost on the system and allows time for real capacity market reform. And that is what our broad-based coalition of generators, hyperscalers, and utilities recently proposed at a PJM workshop. We look forward to continuing the dialogue on this critical policy development, and in the meantime, we support the extension of the current floor and cap of the base residual auction in order to provide time to make these longer-term reforms. Before I turn the call over to Terry, let me conclude with this. Our strategy, and therefore our investment thesis, is based on real assets on the ground today that can support data center build-out. In doing so, we are creating infrastructure assets out of what were previously merchant generation assets subject to commodity prices, and that in turn is driving lower capital costs and higher returns for our investors. While we have room to run on this current portfolio, we are also set up for the future. In the future, we can augment our current assets with contracted new build and future inorganic powered land site, something that we started last year, by the way, creating a pipeline of opportunities as I previously described. And we have dedicated part of our management team to go after this opportunity with the recent management changes announced last December. This is a durable and tangible model built on today's reality, but with an eye towards future growth. We look forward to your questions, and with that, I'll turn the call over to Terry.