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 (Q3 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 across North America. Revenue comes primarily from long-term transportation contracts, storage fees, and related midstream services. The company’s business is structured around fee-based segments that provide stable, recurring cash flows, with additional exposure to commodity price movements in certain operations.

Revenue Breakdown

• Total Revenue (Q3 2025): $20.0B (−3.9% YoY)
  • Segment breakdown not disclosed in this quarter’s filing; historically, revenue is dominated by natural gas transportation and storage, with additional contributions from crude oil and NGL (natural gas liquids) services.
  • Growth is pressured by lower commodity prices and volume fluctuations, but partially offset by new project ramp-ups and contract renewals.

Gross Profit and Margins

• Gross Profit: $5.39B (27.0% gross margin)
  • Cost of Revenue: $14.6B (−14.0% YoY)
  • ET maintains robust margins due to its fee-based, contract-driven business model and operational scale, which help buffer against commodity price volatility.
• Most costs come from pipeline operating expenses, maintenance, and fuel costs.

Operating Income and Expenses

• Operating Income: $2.15B (−1.4% YoY, 10.8% margin)
• Operating Expenses: $3.24B (+95.8% YoY)
  • R&D: Not disclosed; R&D is typically minimal for midstream operators.
  • SG&A: $268M (−9.8% YoY, 1.3% of revenue) — covers corporate overhead, administrative, and sales functions.
  • ET continues to control costs and invest in system upgrades and expansion projects, while maintaining operational efficiency.

Net Income

• Pre-Tax Income: $1.38B (−9.5% YoY, 6.9% margin)
• Income Tax: $87M (6.3% effective tax rate)
• Net Income: $1.02B (−13.9% YoY, 5.1% net margin)
• ET converts a moderate portion of sales into profit due to its scale, cost discipline, and contract-driven revenue, though net margins are pressured by high interest expense and non-operating items.

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What Drives ET's Money Machine?

• Fee-based transportation and storage contracts: The vast majority of revenue comes from long-term, volume-based contracts for moving and storing hydrocarbons.
• Pipeline throughput: System utilization rates and new project additions are key metrics, with billions of barrels and cubic feet transported each quarter.
• Strategic capital investments: Ongoing investment in pipeline expansions, storage terminals, and system upgrades to support future growth and maintain reliability.
• Growth areas: Expansion into new basins and value-added services (e.g., fractionation, export terminals), though some projects may not yet be profitable.

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 pipeline operations and SG&A) taking the largest chunk.
• Even after significant costs and high interest expense, 5.1% of revenue drops to the bottom line.

Key Takeaways

• ET's money comes overwhelmingly from fee-based transportation and storage contracts in the midstream energy sector.
• High gross margins illustrate the power of ET's scale and contract-driven business model, though net margins are moderate due to interest and non-operating costs.
• Heavy investment in infrastructure expansion, balanced by efficiency in operating costs.
• Ongoing growth is driven by new project ramp-ups, contract renewals, and system optimization.

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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 transportation and storage contracts for natural gas, crude oil, and NGLs. Additional revenue comes from commodity sales and value-added services, but these are less significant.

2. How profitable is ET in Q3 2025?

ET reported net income of $1.02B in Q3 2025, with a net margin of approximately 5.1%, reflecting moderate profitability driven by scale, contract stability, and cost discipline.

3. What are the largest expense categories for ET?

The biggest expenses on ET's income statement are cost of revenue (pipeline operations, maintenance, and fuel) and operating expenses, particularly SG&A, which totaled $268M in Q3 2025 as ET prioritizes efficient management and system reliability.

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

Certain segments, such as new project developments or commodity-exposed divisions, may post operating losses due to heavy upfront investment and lower initial utilization. ET invests aggressively in expanding its network, 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 Q3 2025 was 6.3%, lower than previous years. This low rate is primarily due to tax benefits from accelerated depreciation, partnership structure, and certain non-cash deductions.