Talen Energy’s 1Q18 earnings performance benefitted from higher generation volume and margin expansion, said two sources familiar with the matter.

The northeastern regional power company booked USD 219m of adjusted EBITDA for the quarter, compared to USD 109m in 1Q17, the sources continued. Operating revenue came to USD 814m, up from USD 676m in the prior-year period. Reported adjusted free cash flow for the quarter was USD 110m.

The Riverstone-owned company is on track to meet its FY18 adjusted EBITDA guidance range of USD 625m-775m and adjusted FCF guidance of USD 25m-175m, the sources noted. The kept timeline can be linked to the completion of the Susquehanna nuclear refueling outage on schedule and on budget and continued execution to lower fixed costs in G&A and plant O&M

The company’s bonds have been rallying since the PJM Interconnection auction allocated capacity prices of USD 140 per MW-day on 23 May. The Talen capital structure has also been lifted by reports that the Energy Department is reviewing a plan to provide federal assistance for struggling coal and nuclear power plants. As such, Talen’s USD 625m 10% senior unsecured notes traded at 93.625 yesterday (7 June), up from 92 on 23 May, and 87 before in early May, according to MarketAxess.

As of 31 March, Talen carried leverage of 4.5x, based on approximately 860m of LTM adjusted EBITDA and USD 3.9bn of total debt, including two TLBs and several classes of unsecured and municipal bonds, the sources said.

Liquidity consisted of USD 64m of cash and cash equivalents and USD 1.2bn of revolver capacity, the sources said.

Messages left for Talen officials were not returned.

2018 Debtwire