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Talen Energy ups 2016 earnings guidance on asset sale

Talen EnergyCorp increased its full-year 2016 earnings guidance May 10 toreflect the sale of certain assets. The company is now targeting full-yearadjusted EBITDA of $655 million to $855 million and adjusted free cash flow, orFCF, of $260 million to $460 million.

The company had initiated its 2016 earnings guidance inFebruary, targeting adjustedEBITDA of $635.0 million to $835.0 million and adjusted FCF of $250.0 millionto $450.0 million.

Talen Energy completed the sale of two hydroelectric facilities inApril; together with the sale of the Ironwood and C.P. Crane facilities in February, the company said ithas complied with FERCrequirements that paved way for its formation. The company wasestablished last year after PPLCorp.'s PPL Energy Supply LLC and 's RJS Power Holdingsbusinesses were combined.

Talen Energy announced the updated guidance in its earningsrelease, reporting largely flat year over year first-quarter 2016 adjustedEBITDA of $235 million and a decrease in adjusted free cash flow of $7 millionto $100 million a year ago.

Talen's East business segment contributed $276 milliontoward first-quarter 2016 adjusted EBITDA, up $4 million year over year, whilethe West business segment reported a negative adjusted EBITDA of $10 million asopposed to the positive adjusted EBITDA of $5 million during the first threemonths of 2015.

The East segment includes operations in , and , while theWest segment includes operations in the Electric Reliability Council of Texas Inc. and WesternElectricity Coordinating Council markets in Texas, Montana and Arizona.

Talen Energy posted a $133 million year-over-year increasein first-quarter 2016 operating income to $311 million. The result includes a$392 million contribution from the East segment and a $28 million operatingloss at the West business segment.

The East segment had booked an operating income of $231million during the 2015 first quarter, while the West business segment hadrecorded an operating loss of $1 million during that same period.

Talen Energy generated $1.17 billion in first-quarter 2016operating revenues, up from $1.09 billion in the opening months of 2015.Operating expenses were down to $862 million from $913 million a year ago.

The company posted an increase in net income to $151million, or $1.17 per share, from $96 million, or $1.15 per share, in the firstquarter of 2015.

"We continue to position the company to be moreresilient to periods of extended low commodity prices by cutting costs, makingeffective use of capital, and operating our plants safely and reliably,"Talen Energy President and CEO Paul Farr said of the results.

The company has scheduled a conference call at 8 a.m. ET onMay 10 to discuss its results.