Talen Energy Corporation · NASDAQ:TLN
Talen Energy — Q1 2023 Earnings Presentation
27 slides from Talen Energy's earnings presentation, May 16, 2023
Slide 1: Q1 2023 Earnings Presentation
Q1 2023 Earnings Presentation Talen Energy Supply | May 16, 2023
Slide 2: Disclaimers
Disclaimers The information contained herein, as well as any information that has been supplied orally in connection herewith, speaks only as of the date of this presentation. Talen Energy Supply (“Talen,” “TES,” the “Company,” “we,” “our,” or “us”) and our affiliates and representatives expressly d
Slide 3: Speaker and Agenda
Speaker and Agenda Speaker Agenda 1. Key Highlights John Chesser Chief Financial Officer 2. Operational & Financial Update 3. Exit Financing & Emergence Update Investor Contacts Rajat Prakash Gateway Investor Relations Vice President – Treasurer InvestorRelations@TalenEnergy.com Rajat.Prakash@TalenE
Slide 4: 1. Key Highlights
1. Key Highlights
Slide 5: Q1 2023 Business Highlights – Strong Start to the Year
Q1 2023 Business Highlights – Strong Start to the Year Delivered Strong Results in Q1 12.4 GW 15 Produced Generation Mix Generated at Achieved Generation portfolio Generation facilities1 6,637 GWh 63% 25% 1.5% Total Generation Carbon-Free Capacity Factor2 Equivalent Forced 4 2,100+ Outage Factor3 Ma
Slide 6: Successful Exit Financing Delivered $875mm Liquidity with No Near-Term Recourse Maturities
Successful Exit Financing Delivered $875mm Liquidity with No Near-Term Recourse Maturities Emergence • Plan of Reorganization confirmed by U.S. Bankruptcy Court for the Reorganization Southern District of Texas on December 15, 2022, supported by nearly Plan Confirmed Expected on May 17th all credito
Slide 7: Multiple Drivers of Value Creation
Multiple Drivers of Value Creation 2.2 GW Interest in Zero-Carbon Susquehanna Facility1 >8 GW Gas and Peaking Fleet3 ~18mm MWh of annual generation1 eligible for up to Reliable assets positioned to capture upside from power $15/MWh PTC beginning in 2024 price dynamics in PJM and ERCOT • Susquehanna
Slide 8: 2. Operational & Financial Update
2. Operational & Financial Update
Slide 9: Hedges Delivered Value With Strong Fleet Reliability
Hedges Delivered Value With Strong Fleet Reliability Warm winters in PJM and ERCOT lowered our fleet’s generation and capacity factors, but our hedge program locked in higher 2022 pricing to deliver hedge gains of $586mm and realized energy margin of $749mm in Q1 2023 Capacity Factors1 Fleet Equival
Slide 10: Q1 Delivered $660mm of Adjusted EBITDA & $497mm of Adjusted Free Cash Flow
Q1 Delivered $660mm of Adjusted EBITDA & $497mm of Adjusted Free Cash Flow Realized Energy Margin: $749mm Adjusted EBITDA1 of $660mm for Q1 2023 • Realized Energy Margin was robust in Q1 2023 despite warm weather that drove lower settled day ahead prices in PJM and ERCOT ($ in millions) FY 2022 Q1 2
Slide 11: 3. Exit Financing & Emergence Update
3. Exit Financing & Emergence Update
Slide 12: Efficient & Successful Restructuring Results in a Low LTV
Efficient & Successful Restructuring Results in a Low LTV Clear Pathway to Emergence Reduction in Recourse Debt2 ($mm) Equity Rights Offering ($mm) Net Loan-to-Plan Value4 ($mm) Plan of Reorganization confirmed on Attractive Net LTV of ~40% December 15th, with broad support1 ~$2.5bn Reduction in Rec
Slide 13: Exit Financing Delivered Long-Dated Debt Maturities and $875mm+ of Liquidity
Exit Financing Delivered Long-Dated Debt Maturities and $875mm+ of Liquidity No Significant Recourse Funded Debt Maturities until 20301 Exit Financing Overview Recourse Term Loans / 1st Lien Bonds ($ in millions) In late April 2023, Talen priced several exit financing offerings, which, together with
Slide 14: New Funded Exit Debt Summary and Estimated Capitalization at Emergence
New Funded Exit Debt Summary and Estimated Capitalization at Emergence New Funded Exit Debt Summary Pro Forma Capitalization2 ($ in millions) Cash at Emergence $175 On April 28, 2023, Talen priced $580mm term loan B and $1.2bn of secured notes to finance its emergence New Cash-Funded LC Facility (Te
Slide 15: 5. Appendix
TALENS ENERGY
Slide 16: Generation Assets Overview
Generation Assets Overview One of the Nation’s Largest Independent Power Producers, with ~12.4 GW of Net Portfolio Capacity Asset Overview Portfolio Breakdown1 ISO-NE WECC 1% Nuclear Natural Gas Planned Conversion of Coal2 Minority-Owned Coal Planned Retirement of Coal3 2% Energy Only ERCOT 14% 16%
Slide 17: Generation Portfolio Summary
Generation Portfolio Summary Owned Asset Location Primary Fuel Type Plant Type Ownership Capacity (MW)1 COD Region Zero-Carbon Nuclear Susquehanna2 PA Nuclear Baseload 90% 2,245 1983 - 1985 PJM-PPL/MAAC Natural Gas & Peaking Units Barney Davis TX Natural Gas Intermediate 100% 897 1974 - 2010 ERCOT-S
Slide 18: Talen Long-Term Funded Debt Maturities at Emergence
Talen Long-Term Funded Debt Maturities at Emergence Talen will emerge with no material recourse funded debt maturities until 2030 Credit Ratings Post- Interest Emergence 2031 & Recourse Debt Moody's S&P Fitch Total 2023 2024 2025 2026 2027 2028 2029 2030 Rate Beyond Secured Debt: Talen 2030 Term Loa
Slide 19: A. Summary Financial Results
A. Summary Financial Results
Slide 20: Condensed Consolidated Statements of Operations (Unaudited)
Condensed Consolidated Statements of Operations (Unaudited) (Millions of Dollars) Three Months Ended March 31, 2023 2022 Capacity revenues $ 66 $ 132 Energy and other revenues 862 325 Unrealized gain (loss) on derivative instruments 145 (60) Operating Revenues 1,073 397 Energy Expenses Fuel and ener
Slide 21: Condensed Consolidated Balance Sheets (Unaudited)
Condensed Consolidated Balance Sheets (Unaudited) December 31, (Millions of Dollars) March 31, 2023 2022 Assets Cash and cash equivalents $ 1,361 $ 724 Restricted cash and cash equivalents 225 264 Accounts receivable, net 203 408 Inventory, net 463 457 Derivative instruments 911 2,165 Other current
Slide 22: Condensed Consolidated Statement of Cash Flows (Unaudited)
Condensed Consolidated Statement of Cash Flows (Unaudited) Three Months Ended March 31, 2023 2022 Operating Activities Net income (loss) $ 46 $ (279) Reconciliation adjustments: Impairments 365 — Unrealized (gains) losses on derivative instruments (28) (55) Nuclear fuel amortization 24 27 Depreciati
Slide 23: B. Reconciliation of Non-GAAP Financial Measures
B. Reconciliation of Non-GAAP Financial Measures
Slide 24: Definitions of Non-GAAP Financial Measures
Definitions of Non-GAAP Financial Measures Non-GAAP Financial Measures The following non-GAAP financial measures of Realized Energy Margin, Adjusted EBITDA and Adjusted Free Cash Flow discussed below, which we use as measures of our performance and liquidity. Non-GAAP financial measures do not have
Slide 25: Realized Energy Margin (Unaudited)
Realized Energy Margin (Unaudited) Realized Energy Margin to "Operating Revenues, net of Total Energy Expenses" presented on the Condensed Consolidated Statements of Operations for the three months ended March 31: 2023 2022 Change Electricity sales and ancillary services $ 250 $ 566 $ (316) a) Inclu
Slide 26: Adjusted EBITDA / Adjusted Free Cash Flow Reconciliation (Unaudited)
Adjusted EBITDA / Adjusted Free Cash Flow Reconciliation (Unaudited) The reconciliation from "Net Income (Loss)" presented on the Condensed Consolidated Statements of Operations to Adjusted EBITDA and Adjusted Free Cash Flow for the three months ended March 31: 2023 2022 Net Income (Loss) Attributab
Slide 27: Net Income to Adjusted EBITDA Reconciliation – 2023E
Net Income to Adjusted EBITDA Reconciliation – 2023E The reconciliation from forecasted “Net Income (loss)” to Adjusted EBITDA on a Consolidated (Excluding Cumulus Affiliates) and Recourse (Excluding LMBE-MC and Cumulus Affiliates) basis for the year ended December 31: Consolidated (Excluding Cumulu