Talen recasts FY19 EBITDA and free cash flow guidance after 2Q19 earnings growth

Talen Energy Supply recently posted an earnings uptick for its 2Q19 period, and management also took the reporting opportunity to narrow the respective ranges for full year 2019 EBITDA and free cash flow guidance, according to two sources following the company.

The Riverstone-owned northeastern power company tightened 2019 EBITDA guidance to USD 600m-700m from USD 575m-725m. Free cash flow guidance for the year was also changed to USD 10m – USD 110m from USD 0m-120m, the sources said.

On the earnings front, Talen generated USD 137m of adjusted EBITDA, up 2% from USD 134m in 2Q18, the sources said. Revenue for the quarter totaled USD 761m, up 23% from USD 617m year-over-year in the corresponding period, one of the sources added.

As of 30 June, the company’s liquidity totaled USD 747m through USD 77m of cash and USD 670m of revolver availability. The company expects to close on its previously announced sale of its interests in the Interstate Energy Company pipeline in 2H19 for USD 155m, pending FERC approval. Pro forma the asset sale proceeds, the company’s liquidity will total USD 902m.

The company is 6.1x levered, based on USD 4.6bn of recourse and non-recourse debt and LTM consolidated adjusted EBITDA of USD 762m. On a recourse debt basis, the company is 5.6x-levered through USD 656m of LTM recourse debt and USD 3.67bn of total recourse debt.

Talen’s USD 750m 7.25% senior unsecured notes due 2027 traded as high as 98.75 to yield 7.463% last week, up more than a point from trades at 97.5 on 6 August before the earnings report. Its USD 550m 6.5% senior unsecured notes due 2025 traded today at 77.25 to yield 12.077%, in line with recent levels, according to MarketAxess.

Talen did not respond to a request for comment.

2019 Debtwire

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