Western Midstream Partners, LP (WES) Income Statement

The sequential acceleration from 22.5% in 2026Q1 to 30.0% in 2026Q2 indicates strengthening demand for midstream services, likely driven by increased throughput volumes. This growth appears organic, as no acquisition-related revenue is disclosed, and it outpaces the peer average, positioning WES as a top-line outperformer.

The 2025Q4 margin compression appears tied to a one-time cost increase, as margins rebounded to 67.1% in 2026Q2. This volatility suggests exposure to variable costs, possibly from higher throughput or maintenance, but the underlying structural margin remains high relative to peers like EPD and ET, indicating strong pricing power.

SG&A as a percentage of revenue fell to 7.2% in 2026Q2 from 8.1% in 2025Q4, indicating that overhead costs are not scaling with revenue. This operating leverage amplifies bottom-line growth, with net income up 18% sequentially, and suggests management is effectively controlling fixed costs.

The COGS spike in 2025Q4 appears anomalous, as it reverted to $264M in 2026Q1, suggesting a possible one-time expense or inventory adjustment. SG&A has been consistently around $65-85M, showing disciplined overhead management. The primary cost driver is COGS, which is subject to commodity-linked pass-through costs, warranting monitoring for future volatility.

This quarter stands out as an inflection point, with operating income reaching $679.4M, likely due to a one-time gain or favorable contract settlement. Subsequent quarters normalized to net margins around 30-35%, indicating that the 2024Q1 level was not sustainable. The lasting impact is a higher revenue base, but investors should treat that quarter as an outlier when forecasting future profitability.