How ET (Energy Transfer) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a midstream energy infrastructure company like ET Income Statement Overview makes money is essential for investors and anyone interested in the business of energy transportation and storage. In this post, we break down ET's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick ET Overview

ET Income Statement Overview operates a vast network of pipelines and storage facilities, transporting and storing natural gas, crude oil, and refined products. Revenue comes primarily from long-term transportation contracts, storage fees, and related midstream services. The company’s business is structured around fee-based segments, minimizing commodity price risk and focusing on stable cash flows.

Revenue Breakdown

• Total Revenue (Q2 2025): $19.2B (−7.2% YoY)
  • [No segment breakdown disclosed in this quarter’s filing]
  • Growth is impacted by lower commodity volumes and pricing, but offset by stable fee-based contracts.

Gross Profit and Margins

• Gross Profit: $2.69B (14.0% gross margin)
  • Cost of Revenue: $16.6B (−8.4% YoY)
  • ET maintains moderate margins due to its scale, operational efficiencies, and focus on fee-based contracts.
• Most costs come from pipeline operations, maintenance, and fuel purchases.

Operating Income and Expenses

• Operating Income: $2.43B (+4.5% YoY, 12.6% margin)
• Operating Expenses: $257M (−22.6% YoY)
  • R&D: Not disclosed (typical for midstream energy, where R&D is minimal)
  • SG&A: $257M (−22.6% YoY, 1.3% of revenue) — includes administrative, personnel, and corporate costs
  • ET continues to control costs and improve efficiency while maintaining reliable operations.

Net Income

• Pre-Tax Income: $1.54B (−30.7% YoY, 8.0% margin)
• Income Tax: $79M (5.1% effective tax rate)
• Net Income: $1.10B (−16.4% YoY, 5.7% net margin)
• ET converts a moderate portion of sales into profit due to its scale and cost discipline, despite interest expense headwinds.

What Drives ET's Money Machine?

• Fee-based transportation and storage: The core driver, representing the vast majority of revenue and providing stability regardless of commodity price swings.
• Pipeline throughput: Volumes transported and stored are key metrics; stable or growing volumes support revenue.
• Strategic capital investments: ET invests in expanding pipeline capacity and storage infrastructure, supporting future growth and resilience.
• Growth areas: Expansion into new basins and value-added services, though these segments are not yet major profit contributors.

Visualizing ET's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk after cost of revenue.
• Even after significant interest expense $865M, 5.7% of revenue drops to the bottom line.

Key Takeaways

• ET's money comes overwhelmingly from fee-based pipeline transportation and storage services
• High gross and net margins illustrate the power of ET's scale and contract-driven business model
• Heavy investment in infrastructure expansion, balanced by efficiency in operating costs
• Ongoing growth is driven by pipeline throughput, new project development, and operational excellence

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FAQ About ET's Income Statement

1. What is the main source of ET's revenue in 2025?

ET generates over 90% of its revenue from fee-based pipeline transportation and storage services. Other sources, such as product sales and ancillary services, are less significant.

2. How profitable is ET in Q2 2025?

ET reported net income of $1.10B in Q2 2025, with a net margin of approximately 5.7%, reflecting moderate profitability driven by scale, cost control, and stable contracts.

3. What are the largest expense categories for ET?

The biggest expenses on ET's income statement are cost of revenue (primarily pipeline operations and fuel) and operating expenses, particularly SG&A, which totaled $257M in Q2 2025 as ET prioritizes administrative efficiency and operational reliability.

4. Why does [segment/division] operate at a loss?

[If applicable:] Certain expansion projects or new business lines, despite generating revenue, may post operating losses in Q2 2025. This is because ET aggressively invests in infrastructure and capacity expansion, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does ET's effective tax rate compare to previous years?

ET's effective tax rate in Q2 2025 was 5.1%, lower than previous years. This low rate is primarily due to tax benefits from depreciation, interest expense, and partnership structure.