Talen Energy Corporation

Good day and thank you for standing by. Welcome to the Talon Energy Corporation second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Sergio Castro, Vice President and Treasurer. Please go ahead.

Thank you, Amber, and welcome to Talent Energy's second quarter 2026 conference call. Speaking today, our Chief Executive Officer, Mark McFarland, President Terry Nutt, and Chief Financial Officer, Cole Muller. We are joined by other Talend senior executives to address questions during the second part of today's call as necessary. We issued our earnings release this afternoon along with the presentation, all of which can be found in the investor relations section of Talend's website, TalendEnergy.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 relief and the appendix of our presentation. With that, I will now turn the call over to Mac.

Thank you, Sergio, and good afternoon, everyone. We appreciate your interest and talent, and we look forward to the discussion during our Q&A. Let me start by addressing our strategy and its intersection with the markets and the regulatory environment. At Talon, we remain committed to our flywheel strategy of owning low-cost existing baseload assets and entering into long-term contracts. And like any good strategy, the key is to build a solid foundation on a view that is directionally accurate but not precise. Accurate in that the direction of travel maximizes value in any future, but not so precise in that the strategy can be constantly refreshed to take advantage of changes without creating wholesale change in the overall direction of travel. Our direction of travel remains fundamentally the same. We believe we control our future in whatever form the future takes, and we have advantaged assets in advantaged locations, and we have built on those assets with our development pipeline of powered land and capacity additions. Our assets primarily sit in the PPL zone and in AEP Ohio. PPL is a zone that has two times the generating capacity of current load and has excess transmission capacity within the zone. This means that large loads can be absorbed within the region and that is what you see the AWS campus being built as well as many other large data centers being developed in the PPL region. And we are in AAP Ohio, a region that is business friendly, data center friendly, and already a large hub for data centers. We like our positioning of existing assets. We believe energy in these areas will be increasingly valuable in any future, a fact that is proving out as we speak with energy prices rising and capacity continuing to clear at the caps. We continue to believe in this underlying value and the ability to contract for both energy and capacity of our existing assets. Yes, despite the noise around regulatory rulemaking, it does not change the fact that our assets provide for the base energy and capacity for the region and again in PPL more specifically. And if they are contracted standalone, contracted in the hybrid model, contracted to CNI or simply taken to market, these assets are becoming more and more valuable in PJM. The PPL zone is constrained and it has more gen than load and transmission doesn't allow it to get out to the fullest extent. That will be fixed as transmission is built, which has already been approved. and it will be fixed as more load is brought to the region. And again, that load is already in development. Terry and Cole will expand on both these aspects later, advantaged assets and advantaged location. The same is true for our Ohio assets, but I won't belabor the point. That said, we, as well as some of our customers, do recognize that new capacity will need to be brought online. That is why we are also supplementing these advantaged assets with our development pipeline. Powered Land and New Capacity. Our powered land development is not because we are getting into the digital space, nor do we expect you to value us off of land development. That is not our business, nor our value proposition. We exited that business when we sold the campus to AWS. However, by working with local communities and the local utilities to power sites for late 2020's electrification, we are enabling front of the meter solutions. Solutions that provide the opportunity for long-term contracts of energy from our existing portfolio. Additionally, capacity for these contracts can come in two forms, from existing sites or from capacity additions. And that is why we have developed a pipeline of new capacity, focusing on batteries, peakers, and upgrades. We believe blending new capacity with existing energy on a front-of-the-meter grid-connected site is more reliable and durable. and, in fact, less expensive than any behind-the-meter solution. And we think that is a winning proposition in the long run for our customers and is the basis for our strategy. In summary, we remain flexible, commercial, and forward-leaning, and we like the direction of travel with the Talon flywheel. Now turning to the quarter. The fleet performed well, and we delivered $374 million of adjusted EBITDA and $212 million of adjusted free cash flow. for the quarter, demonstrating the value of our recent acquisitions. In June, we closed on the Waterford, Darby, and Lawrenceburg plants, bringing over 2.5 gigawatts of efficient natural gas-fired generation assets into our portfolio just in time for the peak summer demand. I'd like to welcome the teams at these sites into the Talon family. We look forward to your safe and reliable operations for years to come. We executed on our share repurchase program by buying back 550,000 shares during the quarter and we are committed to our target of returning 70% of adjusted free cash flow to shareholders through the SRP. Cole will discuss the power of our near-term cash flows and how that capital return impacts our 27 and 28 outlooks later in the presentation. PJM fundamentals continue to strengthen and we have seen a nearly 50% increase in WestHub Sparks since last year. It is interesting to note that just a short while ago, we were discussing transacting long-term PPAs with hyperscalers at prices in the $80 per megawatt hour range, and now the forward wholesale prices for capacity and energy are approaching those levels, if not exceeding them. Long-term forwards have finally caught a bid, and as we like to joke internally, Chris was finally right. and we are seeing the renewed interest in long-term contracts in the CNI space. And what is interesting here is that while broker quotes for capacity are in the mid to upper 200s for the years post the cap auctions, in the bilateral market we have seen bids at the cap level for the early 2030s and for tenor. A word of caution in that these are thinly traded, but one should also view this as a supportive sign of capacity pricing in the out years. The near-term PJM capacity markets continue to reflect strengthening fundamentals as well, with the last three base residual capacity auctions clearing at the price cap and uncapped prices that would have settled in excess of $500 a megawatt day. As we discussed last quarter, now that the Cornerstone transaction is closed, we are updating and raising our 2026 guidance for the acquisitions. Additionally, we are increasing our 27 and 28 adjusted free cash flow per share outlooks. We'll provide 27 guidance and 28 and 29 outlooks during the third quarter earnings call, which you should expect is normal course going forward. Our annual plan is to provide guidance for the upcoming year each fall along with an outlook for the two following years. We did this a couple of additional times this year because of the uniqueness of adding a significant gas portfolio through M&A early in the year. However, you shouldn't expect that going forward. Well, that is, unless we have other significant business changes that would warrant an update. With that, I'll turn the call over to Terry.