Northrop Grumman Corporation
10/20/2026 | Press release | Distributed by Public on 10/20/2026 14:02
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
Northrop Grumman Corporation (herein referred to as "Northrop Grumman," the "company," "we," "us," or "our") is a leading global aerospace and defense technology company. We deliver a broad range of products, services and solutions to U.S. and international customers, and principally to the U.S. Department of War ("DoW") and intelligence community. Our broad portfolio is aligned to support national security priorities and our solutions equip our customers with capabilities they need to connect, protect and advance humanity.
The company is a leading provider of space systems, military aircraft, missile defense, advanced weapons and long-range fires capabilities, mission systems, networking and communications, strategic deterrence systems, and breakthrough technologies, such as advanced computing, microelectronics and cyber. We are focused on competing and winning programs that enable continued growth, performing on our commitments and affordably delivering capability our customers need. With the investments we've made in advanced technologies, combined with our talented workforce and digital transformation capabilities, Northrop Grumman is well positioned to meet our customers' needs today and in the future.
The following discussion should be read along with the financial statements included in this Form 10-Q, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Liquidity and Capital Resources," "Quantitative and Qualitative Disclosures About Market Risks" and "Risk Factors" in our 2025 Annual Report on Form 10-K, which provides additional information on our business, the environment in which we operate and our operating results.
Divestiture of Training Services Business
On May 24, 2025 (the "Divestiture date"), the company completed its previously announced sale of substantially all of the Immersive Mission Solutions (IMS) operating unit of Defense Systems (the "training services" business or "divestiture") for $333 million in cash and recorded a pre-tax gain on sale of $231 million. IMS is a provider of mission training and satellite ground network communications software for U.S. government customers. 2025 operating results include sales and operating income for the training services business prior to the Divestiture date.
Global Security Environment
The U.S. and its allies continue to face a dynamic global security environment of heightened tensions and instability, threats from state and non-state actors, including in particular major global powers, as well as terrorist organizations, increasing nuclear tensions, diverse regional security concerns, political instability and uncertainty concerning global strategic alliances. The market for defense products, services and solutions globally is driven by these complex and rapidly evolving security challenges, considered in the broader context of political and socioeconomic circumstances and priorities. Our operations and financial performance, as well as demand for our products and services, are impacted by these events, including global unrest. The same is true for our suppliers and other business partners.
The ongoing conflicts in Ukraine and Iran and threats elsewhere, particularly in the Middle East and the Western Pacific region, have increased global tensions and instability and highlighted security requirements globally. These conflicts have resulted in and may continue to result in increased demand for defense products and services from allies and partner nations, particularly in those regions. We continue to monitor developments in these regions, but have not experienced, and do not anticipate experiencing, significant adverse financial impacts directly from these conflicts.
We believe the current global security environment, characterized by significant national security threats to the U.S. and its allies, continues to highlight the need for strong deterrence and robust defense capabilities. We are actively evaluating both opportunities and risks associated with this environment and are moving with speed and at scale to deliver innovative solutions to our customers. We believe our capabilities, particularly in space, C4ISR, air and missile defense, battle management, solid rocket motors, advanced weapons, strategic deterrence, survivable aircraft, autonomous aircraft systems and mission systems should help our customers in the U.S. and globally defend against current and future threats and, as a result, continue to position us for long-term profitable business growth.
Global Economic Environment
Over the past several years, the global economic environment has experienced challenges, including inflationary pressures; widespread delays and disruptions in supply chains; constraints on the availability of critical materials, including rare earth minerals and metals; business slowdowns or shutdowns; workforce challenges and labor shortfalls; and market volatility. These macroeconomic factors have contributed, and could continue to contribute, to increased costs, delays, disruptions and other performance challenges, as well as increased competing demands for
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limited resources to address such increased costs and other challenges, for our company, suppliers and partners, and customers.
In addition, increases or fluctuations in interest rates could impact government spending priorities (in the U.S. and allied countries, in particular), including the demand for defense products. Economic tensions and changes in international trade policies, including, for example, widespread tariffs announced since last year by the U.S. on its major trading partners, higher tariffs on imported goods and materials and actions taken in response (such as retaliatory tariffs or other trade protectionist measures or the renegotiation of free trade agreements), could also further impact the global market for defense products, services and solutions. In addition, following the first quarter 2026 U.S. Supreme Court decision that invalidated tariffs imposed pursuant to the International Emergency Economic Powers Act ("IEEPA"), the U.S. has announced various tariffs under different statutory authorities. The full impact of these governmental actions on macroeconomic conditions and on our business is uncertain, difficult to predict and depends on a number of factors, including the extent and duration of tariffs, the availability of exemptions, changes in the amount and scope of tariffs, any reversal or temporary suspension of announced tariffs, the availability of refunds for tariffs paid under IEEPA, the imposition of new tariffs and other measures that target countries may take in response to U.S. trade policies, and possible resulting general inflationary pressures in the global economy. We are continuing to monitor the impact on our business, suppliers and customers, but do not believe that the tariffs, including the IEEPA tariffs, have had or will have a material adverse effect on our business.
U.S. Political, Budget and Regulatory Environment
The U.S. continues to face an uncertain and evolving political, budget and regulatory environment. In particular, it is difficult to predict the specific course of future defense budgets. Current and future requirements related to the conflicts in Ukraine and Iran and threats in the Middle East, the Western Pacific and Latin America and other security priorities, as well as the macroeconomic environment, the national debt, and other domestic priorities, among other things, in the U.S. and globally, will continue to impact our customers' budgets, spending and priorities, and our industry. The U.S. political environment may also impact defense budgets and priorities, issues related to the national debt, and government spending more broadly. We anticipate that issues related to budgetary priorities, defense spending levels and the debt ceiling will continue to be subjects of considerable debate, with a potentially significant impact on our programs and the company.
On July 4, 2025, the FY 2025 reconciliation bill titled the One Big Beautiful Bill Act (the "OBBBA") was enacted. The OBBBA allocated approximately $150 billion in mandatory defense funding, including funding for air and missile defense, munitions, strategic deterrence, shipbuilding and supply chains and other military capabilities. The appropriated funds will remain available to be obligated until September 30, 2029 and expended through FY 2034. Funding from the OBBBA has allowed for increased investments by the DoW in defense modernization projects, homeland missile defense capabilities, and increased production capacity across a number of key programs. See Note 4 to the financial statements for additional information on key income tax provisions of the OBBBA.
On February 3, 2026, annual appropriations to fund a vast majority of the federal government for FY 2026, including approximately $859 billion for defense, were enacted. Appropriations to partially fund the Department of Homeland Security were enacted on April 30, 2026, with the remaining appropriations enacted on June 10, 2026. On April 3, 2026, the Trump Administration (the "Administration") released its FY 2027 budget request. The request includes $1.45 trillion for defense, with $1.1 trillion in the base budget (discretionary funding) and $350 billion in reconciliation (mandatory) funding. The total defense budget request reflects an increase of 44% ($441 billion) above the FY 2026 enacted levels (including $153 billion in FY 2026 reconciliation funding). Congress is evaluating the Administration's budget request as it drafts authorization and appropriations legislation for FY 2027. Additionally, the Administration requested $88 billion in supplemental funding for FY 2026, which included $67 billion to address the operational costs associated with the Iran conflict and other defense priorities. There is uncertainty as to when Congress will act on the reconciliation funding and supplemental request.
On September 2, 2026, a continuing resolution ("CR") was enacted to provide funding for the federal government, including the DoW, through December 11, 2026, generally at FY 2026 funding levels. The CR also requires that any new multi-year contracts for military equipment receive prior Congressional approval. Annual appropriations for FY 2027 have not yet been enacted, and it remains uncertain when the government will approve full-year FY 2027 appropriations and what levels of funding those appropriations will provide. Government operations under an extended CR could have adverse impacts on our programs and new starts, in particular. If the CR is not extended or full-year appropriations legislation is not enacted before the current CR expires, a government shutdown could occur. A prolonged government shutdown could result in program disruptions and limit the U.S. Government's ability to progress programs and make timely payments.
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The Administration has issued numerous executive orders, including orders to undertake a comprehensive overhaul of the Federal Acquisition Regulation, to reform the DoW defense acquisition process and, more recently, to promote the use of fixed price contracts where appropriate and to address underperformance and insufficient prioritization of government contracts, insufficient investment in production and production speed and incentive compensation metrics applicable to defense contractors. See "Risk factors" for further discussion regarding risks associated with executive orders and regulatory changes. Some of the Administration's executive orders are subject to ongoing court challenges. In addition, the DoW has outlined initiatives to, among other efforts, reform government contract accounting and promote supplier cost and pricing transparency. Implementation of certain of these executive orders and initiatives could adversely affect our business or create a more challenging or costly regulatory, operating and economic environment.
In light of the ongoing conflicts and heightened global instability as well as political tensions and related legal challenges, we expect continued uncertainty in the global security, U.S. political, budget and regulatory environment. Initiatives to reduce governmental spending, federal budget and debt ceiling action, and further changes in U.S. government policy positions, including trade and foreign policy, tax policy and DoW policies or priorities, could materially impact defense spending broadly and the company's programs in particular.
B-21 Program
In 2015, the U.S. Air Force awarded Northrop Grumman the B-21 contract, which includes a base contract for EMD and five low-rate initial production (LRIP) options for a baseline total of 21 aircraft. The EMD phase of the program is largely cost type and began at contract award. The LRIP options are largely fixed price and are expected to continue to be awarded and executed through approximately the end of the decade. We have previously recognized and disclosed cumulative losses of approximately $2.0 billion on the LRIP phase of the program. Northrop Grumman and the U.S. Air Force have also established not to exceed (NTE) pricing for two additional lots. Final terms, quantity, and pricing for the NTE lots are not fully negotiated; however, the average value for these NTE lots is above the average unit price of the five LRIP lots, and the NTE lots include an economic price adjustment clause to help protect against certain inflationary pressures.
During the first quarter of 2026, we reached an agreement with the U.S. Air Force to expand production capacity for the B-21 program and increase the aircraft production rate. We continue to expect to invest approximately $2.5 billion over a multi-year period to expand production capacity; in return, we have the opportunity to earn improved returns on the LRIP and NTE phases of the program.
During the third quarter of 2026, we again reviewed our estimated profitability on the LRIP phase of the program and made no significant changes to the previously recognized loss. The company's third quarter 2026 results reflect our current best estimate of cost to complete the LRIP and NTE aircraft, as well as the outcome of ongoing discussions with our suppliers. If our estimated cost to complete the aircraft changes, or if our assumptions regarding contract performance, quantities, or supplier negotiations are resolved more or less favorably than what we have estimated, our financial position, results of operations and/or cash flows could be materially affected.
Sentinel Program
In 2020, the U.S. Air Force awarded Northrop Grumman a $13.3 billion contract for the EMD phase of the Sentinel program. In January 2024, the U.S. Air Force provided congressional notification that the Sentinel program was under a Nunn-McCurdy breach review, which is required when total program cost estimates exceed certain defined thresholds. This notification, which had been driven primarily by increases in cost estimates for the Production and Deployment phases, commenced the process to achieve certification for continuance of the program and update its baseline cost estimates. We are currently executing under a cost-type contract for the EMD phase, and the Production and Deployment phases are yet to be priced and negotiated.
In July 2024, the Sentinel program was certified for continuation by the DoW upon completion of the Nunn-McCurdy breach review. In connection with the certification, the DoW directed that the program be restructured, including plans for infrastructure related to the command and launch segment, which was the main driver of the increased cost estimates for the Production and Deployment phases.
During the second quarter of 2025, we partnered with the U.S. Air Force in defining the preliminary execution framework necessary for successful restructure of the program. The program restructure will include a revision to the acquisition strategy, joint establishment of a new program baseline, and other critical preparation activities necessary to re-accomplish Milestone B approval.
During the second and third quarters of 2026, we continued to make progress on joint activities with the U.S. Air Force. These efforts, which included requirements and design maturation, risk reduction activities, and evaluation of
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options to accelerate fielding of initial capability, have resulted in further definition and authorization of elements of the program execution plan, resulting in a $9.4 billion increase in program backlog.
During the third quarter of 2026, we again reviewed our estimated profitability on the Sentinel program and made no significant changes. If our estimated cost to complete the restructured EMD effort or our achievement of future contract incentives is more or less favorable than what we have estimated, our financial position, results of operations and/or cash flows could be materially affected.
Operating Performance Assessment and Reporting
In evaluating our operating performance, we primarily focus on changes in sales and operating margin rates. Where applicable, significant fluctuations in operating performance attributable to individual contracts or programs, or changes in a specific cost element across multiple contracts, are described in our analysis. Based on this approach and the nature of our operations, the discussion of results of operations below first focuses on our four segments before distinguishing between products and services. Changes in sales are generally described in terms of volume, while changes in operating margin rates are generally described in terms of performance and/or contract mix. For purposes of this discussion, volume generally refers to increases or decreases in sales or cost from production/service activity levels and performance generally refers to non-volume-related changes in profitability, which are typically described in terms of changes in net EAC adjustments. Contract mix generally refers to changes in the ratio of contract type and/or life cycle (e.g., cost-type, fixed-price, development, production, and/or sustainment). Contract mix can also refer to differences in the profitability of the programs that drive changes in sales (e.g., sales growth or decreases on programs with accretive or dilutive margin rates).
CONSOLIDATED OPERATING RESULTS
Selected financial highlights are presented in the table below:
| Three Months Ended September 30 | % | Nine Months Ended September 30 | % | ||||||||||||||||||||||||||||||||
| $ in millions, except per share amounts | 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||
| Sales | $ | 11,122 | $ | 10,423 | 7 | % | $ | 31,879 | $ | 30,242 | 5 | % | |||||||||||||||||||||||
| Operating costs and expenses | 9,853 | 9,181 | 7 | % | 28,525 | 27,233 | 5 | % | |||||||||||||||||||||||||||
| Gain on sale of business | - | - | NM | - | 231 | NM | |||||||||||||||||||||||||||||
| Operating income | 1,269 | 1,242 | 2 | % | 3,354 | 3,240 | 4 | % | |||||||||||||||||||||||||||
| Operating margin rate | 11.4 | % | 11.9 | % | 10.5 | % | 10.7 | % | |||||||||||||||||||||||||||
| Federal and foreign income tax expense | 174 | 223 | (22) | % | 403 | 573 | (30) | % | |||||||||||||||||||||||||||
| Effective income tax rate | 13.4 | % | 16.9 | % | 11.5 | % | 17.2 | % | |||||||||||||||||||||||||||
| Net earnings | 1,124 | 1,100 | 2 | % | 3,093 | 2,755 | 12 | % | |||||||||||||||||||||||||||
| Diluted earnings per share | $ | 7.89 | $ | 7.67 | 3 | % | $ | 21.72 | $ | 19.12 | 14 | % | |||||||||||||||||||||||
Sales
Current Quarter
Third quarter 2026 sales increased $699 million, or 7 percent, driven by higher sales at all four sectors, including a 14 percent increase at Aeronautics Systems and a 12 percent increase at Defense Systems. These increases were partially offset by $95 million of higher intercompany eliminations.
Year to Date
Year to date 2026 sales increased $1.6 billion, or 5 percent, driven by higher sales at all four sectors, including a 14 percent increase at Aeronautics Systems. These increases were partially offset by $393 million of higher intercompany eliminations.
See "Segment Operating Results" below for further information by segment and "Product and Service Analysis" for product and service detail. See Note 10 to the financial statements for information regarding the company's sales by customer type, contract type and geographic region for each of our segments.
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Operating Income and Margin Rate
Current Quarter
Third quarter 2026 operating income increased $27 million, or 2 percent, primarily due to $68 million of higher segment operating income, partially offset by a $52 million decrease in the FAS/CAS operating adjustment. Operating margin rate declined to 11.4 percent from 11.9 percent principally due to the decrease in the FAS/CAS operating adjustment.
Third quarter 2026 G&A costs as a percentage of sales increased to 9.7 percent from 9.5 percent in the prior year period primarily due to an increase in our investments for future business opportunities, partially offset by higher sales.
Year to Date
Year to date 2026 operating income increased $114 million, or 4 percent, primarily due to $511 million of higher segment operating income largely driven by the prior year B-21 loss provision at Aeronautics Systems, partially offset by the prior year $231 million gain on the training services divestiture and a $164 million decrease in the FAS/CAS operating adjustment. Operating margin rate declined to 10.5 percent from 10.7 percent primarily due to the prior year gain on the training services divestiture and the decrease in the FAS/CAS operating adjustment, partially offset by a higher segment operating margin rate.
Year to date 2026 G&A costs as a percentage of sales decreased to 9.7 percent from 9.9 percent in the prior year period primarily due to higher sales.
See "Segment Operating Results" below for further information by segment. For information regarding product and service operating costs and expenses, see "Product and Service Analysis" below.
Federal and Foreign Income Taxes
Current Quarter
Third quarter 2026 income tax expense decreased $49 million, or 22 percent, due to a lower ETR and $25 million of lower earnings before income taxes. The third quarter 2026 ETR decreased to 13.4 percent from 16.9 percent principally due to higher research credits.
Year to Date
Year to date 2026 income tax expense decreased $170 million, or 30 percent, due to a lower ETR, partially offset by $168 million of higher earnings before income taxes. The year to date 2026 ETR decreased to 11.5 percent from 17.2 percent primarily due to the remeasurement of unrecognized tax benefits during the second quarter of 2026 given recent developments with the IRS towards resolving our previously filed federal income tax returns and refund claims, as well as higher research credits, including a benefit related to CAMT guidance recently issued by the IRS.
See Note 4 to the financial statements for additional information.
Net Earnings
Current Quarter
Current Quarter
Third quarter 2026 net earnings increased $24 million, or 2 percent, primarily due to a $49 million decrease in income tax expense, a $31 million increase in the non-operating FAS pension benefit and a $27 million increase in operating income, partially offset by an $86 million decrease in Other, net largely driven by favorable returns on marketable securities in the prior year.
Year to Date
Year to date 2026 net earnings increased $338 million, or 12 percent, primarily due to a $170 million decrease in income tax expense, a $114 million increase in operating income and a $96 million increase in the non-operating FAS pension benefit, partially offset by a $51 million decrease in Other, net largely driven by lower favorable returns on marketable securities.
Diluted Earnings Per Share
Current Quarter
Third quarter 2026 diluted earnings per share increased $0.22, or 3 percent, reflecting a 2 percent increase in net earnings and a 1 percent reduction in weighted-average diluted shares outstanding.
Year to Date
Year to date 2026 diluted earnings per share increased $2.60, or 14 percent, reflecting a 12 percent increase in net earnings and a 1 percent reduction in weighted-average diluted shares outstanding.
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SEGMENT OPERATING RESULTS
Basis of Presentation
The company is aligned in four operating sectors, which also comprise our reportable segments: Aeronautics Systems, Defense Systems, Mission Systems and Space Systems.
For purposes of the operating results discussion below, we assess our performance using certain financial measures that are not calculated in accordance with GAAP.
Organic Sales
In the operating results discussion below, we present the performance of our Defense Systems sector using organic sales, a financial measure that is not calculated in accordance with GAAP. Organic sales is defined as total sales excluding sales attributable to the company's former training services business. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the company's underlying sales growth as well as in understanding our ongoing business and future sales trends by presenting the company's sales adjusted for the impact of the divestiture. We reconcile this non-GAAP financial measure to its most directly comparable GAAP financial measure below. This non-GAAP measure may not be defined and calculated by other companies in the same manner and should not be considered in isolation or as an alternative to operating results presented in accordance with GAAP.
In the operating results discussion below, we present the performance of our Defense Systems sector using organic sales, a financial measure that is not calculated in accordance with GAAP. Organic sales is defined as total sales excluding sales attributable to the company's former training services business. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the company's underlying sales growth as well as in understanding our ongoing business and future sales trends by presenting the company's sales adjusted for the impact of the divestiture. We reconcile this non-GAAP financial measure to its most directly comparable GAAP financial measure below. This non-GAAP measure may not be defined and calculated by other companies in the same manner and should not be considered in isolation or as an alternative to operating results presented in accordance with GAAP.
Segment Operating Income and Margin Rate
Segment operating income, as reconciled in the table below, and segment operating margin rate (segment operating income divided by sales) are non-GAAP measures that reflect the combined operating income of our four segments less the operating income associated with intersegment sales. Segment operating income includes pension expense allocated to our sectors under FAR and CAS and excludes FAS pension service expense and unallocated corporate items (certain corporate-level expenses, which are not considered allowable or allocable under applicable FAR and CAS requirements, and costs not considered part of management's evaluation of segment operating performance). These non-GAAP measures may be useful to investors and other users of our financial statements as supplemental measures in evaluating the financial performance and operational trends of our sectors. These measures may not be defined and calculated by other companies in the same manner and should not be considered in isolation or as alternatives to operating results presented in accordance with GAAP.
| Three Months Ended September 30 | % | Nine Months Ended September 30 | % | ||||||||||||||||||||||||||||||||
| $ in millions | 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||
| Operating income | $ | 1,269 | $ | 1,242 | 2 | % | $ | 3,354 | $ | 3,240 | 4 | % | |||||||||||||||||||||||
| Operating margin rate | 11.4 | % | 11.9 | % | 10.5 | % | 10.7 | % | |||||||||||||||||||||||||||
| Reconciliation to segment operating income: | |||||||||||||||||||||||||||||||||||
| CAS pension expense | (68) | (122) | (44) | % | (188) | (356) | (47) | % | |||||||||||||||||||||||||||
| FAS pension service expense | 53 | 55 | (4) | % | 159 | 163 | (2) | % | |||||||||||||||||||||||||||
| FAS/CAS operating adjustment | (15) | (67) | (78) | % | (29) | (193) | (85) | % | |||||||||||||||||||||||||||
| Gain on sale of training services business | - | - | NM | - | (231) | NM | |||||||||||||||||||||||||||||
| Training services divestiture - unallowable state taxes and transaction costs | - | - | NM | - | 20 | NM | |||||||||||||||||||||||||||||
| Intangible asset amortization and PP&E step-up depreciation | 13 | 21 | (38) | % | 51 | 63 | (19) | % | |||||||||||||||||||||||||||
| Other unallocated corporate expense | 78 | 81 | (4) | % | 199 | 165 | 21 | % | |||||||||||||||||||||||||||
| Unallocated corporate expense | 91 | 102 | (11) | % | 250 | 17 | 1,371 | % | |||||||||||||||||||||||||||
| Segment operating income | $ | 1,345 | $ | 1,277 | 5 | % | $ | 3,575 | $ | 3,064 | 17 | % | |||||||||||||||||||||||
| Segment operating margin rate | 12.1 | % | 12.3 | % | 11.2 | % | 10.1 | % | |||||||||||||||||||||||||||
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Current Quarter
Third quarter 2026 segment operating income increased $68 million, or 5 percent, primarily due to $72 million of higher operating income at Aeronautics Systems. Third quarter 2026 segment operating margin rate of 12.1 percent reflects strong program performance and higher operating margin rates at Aeronautics Systems and Space Systems. Segment operating margin rate decreased from 12.3 percent in the third quarter of 2025 principally due to a prior year $68 million favorable EAC adjustment in the restricted advanced microelectronics portfolio at Mission Systems.
Year to Date
Year to date 2026 segment operating income increased $511 million, or 17 percent, primarily due to $601 million of higher operating income at Aeronautics Systems and $117 million of higher operating income at Mission Systems, partially offset by $78 million of lower operating income at Space Systems and $76 million of lower operating income at Defense Systems. Segment operating margin rate increased to 11.2 percent from 10.1 percent primarily due to a higher operating margin rate at Aeronautics Systems and Mission Systems, partially offset by a lower operating margin rate at Defense Systems and Space Systems.
FAS/CAS Operating Adjustment
The third quarter 2026 and year to date 2026 FAS/CAS operating adjustment reflects lower CAS pension expense largely driven by favorable plan asset returns in prior years.
Unallocated Corporate Expense
Current Quarter
The decrease in third quarter 2026 unallocated corporate expense is primarily driven by lower intangible asset amortization and PP&E step-up depreciation.
Year to Date
The increase in year to date 2026 unallocated corporate expense is primarily due to the prior year $231 million gain on the training services divestiture.
Net EAC Adjustments - We record changes in estimated contract earnings at completion (net EAC adjustments) using the cumulative catch-up method of accounting. Net EAC adjustments can have a significant effect on segment operating income and margin rate.
The aggregate favorable and unfavorable EAC adjustments are presented in the table below:
| Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
| $ in millions | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Favorable EAC adjustments | $ | 482 | $ | 433 | $ | 1,707 | $ | 1,161 | |||||||||||||||
| Unfavorable EAC adjustments | (261) | (352) | (1,472) | (1,054) | |||||||||||||||||||
| Net EAC adjustments | $ | 221 | $ | 81 | $ | 235 | $ | 107 | |||||||||||||||
Net EAC adjustments by segment are presented in the table below:
| Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||
| $ in millions | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Aeronautics Systems | $ | 124 | $ | (66) | $ | 174 | $ | (225) | |||||||||||||||
| Defense Systems | 34 | 35 | 9 | 141 | |||||||||||||||||||
| Mission Systems | 92 | 121 | 212 | 163 | |||||||||||||||||||
| Space Systems | (15) | (5) | (144) | 37 | |||||||||||||||||||
| Eliminations | (14) | (4) | (16) | (9) | |||||||||||||||||||
| Net EAC adjustments | $ | 221 | $ | 81 | $ | 235 | $ | 107 | |||||||||||||||
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AERONAUTICS SYSTEMS
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Three Months Ended September 30 | % | Nine Months Ended September 30 | % | |||||||||||||||||||||||||||||||
| $ in millions | 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||
| Sales | $ | 3,575 | $ | 3,142 | 14 | % | $ | 10,377 | $ | 9,070 | 14 | % | |||||||||||||||||||||||
| Operating income | 377 | 305 | 24 | % | 1,044 | 443 | 136 | % | |||||||||||||||||||||||||||
| Operating margin rate | 10.5 | % | 9.7 | % | 10.1 | % | 4.9 | % | |||||||||||||||||||||||||||
Sales
Current Quarter
Third quarter 2026 sales increased $433 million, or 14 percent, primarily due to a $195 million increase on F-35 driven by the timing of material costs on production lots and increased sustainment volume, higher B-21 sales and an increase in B-2 sustainment volume.
Year to Date
Year to date 2026 sales increased $1.3 billion, or 14 percent, primarily due to higher sales on B-21 and other restricted programs, a $237 million increase on the E-130J TACAMO ("TACAMO") program as it ramps up, a $229 million increase on F-35, and $116 million of higher B-2 sustainment volume. The higher B-21 sales reflect the company's first quarter 2026 agreement with the U.S. Air Force to expand production capacity and increase the aircraft production rate, including the sale of a company-owned test asset. The sales increases were partially offset by a decrease on F/A-18 as final production deliveries have completed.
Operating Income
Current Quarter
Third quarter 2026 operating income increased $72 million, or 24 percent, due to higher sales and a higher operating margin rate. Operating margin rate increased to 10.5 percent from 9.7 percent primarily due to higher net contract margin adjustments, including on certain mature production and sustainment programs.
Year to Date
Year to date 2026 operating income increased $601 million, or 136 percent, due to a higher operating margin rate and higher sales. Year to date 2026 operating margin rate of 10.1 percent reflects strong performance on certain mature production and sustainment programs. Operating margin rate increased from 4.9 percent in 2025 primarily due to the absence of the prior year B-21 loss provision.
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DEFENSE SYSTEMS
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Three Months Ended September 30 | % | Nine Months Ended September 30 | % | |||||||||||||||||||||||||||||||
| $ in millions | 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||
| Sales | $ | 2,307 | $ | 2,059 | 12 | % | $ | 6,299 | $ | 5,855 | 8 | % | |||||||||||||||||||||||
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Less: Training services sales
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- | - | - | (112) | |||||||||||||||||||||||||||||||
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Organic sales
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$ | 2,307 | $ | 2,059 | 12 | % | $ | 6,299 | $ | 5,743 | 10 | % | |||||||||||||||||||||||
| Operating income | $ | 250 | $ | 234 | 7 | % | $ | 590 | $ | 666 | (11) | % | |||||||||||||||||||||||
| Operating margin rate | 10.8 | % | 11.4 | % | 9.4 | % | 11.4 | % | |||||||||||||||||||||||||||
Sales
Current Quarter
Third quarter 2026 sales increased $248 million, or 12 percent, primarily due to a $180 million increase on Sentinel as the program continues to ramp, higher volume on the Guided Multiple Launch Rocket System Extended Range (GMLRS ER) program due to the timing of awards, and higher volume on various tactical solid rocket motor programs. These increases were partially offset by lower volume on armament programs, primarily on certain military ammunition programs.
Year to Date
Year to date 2026 sales increased $444 million, or 8 percent, primarily due to a $356 million increase on Sentinel as the program continues to ramp, a $114 million increase on various tactical solid rocket motor programs, and higher volume across the IBCS portfolio. These increases were partially offset by a $112 million reduction in sales related to the divested training services business and a $109 million decrease on armament programs, including certain military ammunition programs.
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Operating Income
Current Quarter
Third quarter 2026 operating income increased $16 million, or 7 percent, primarily due to higher sales, partially offset by a lower operating margin rate. Operating margin rate decreased to 10.8 percent from 11.4 percent, primarily due to changes in contract mix toward more cost-type content.
Year to Date
Year to date 2026 operating income decreased $76 million, or 11 percent, primarily due to a lower operating margin rate, partially offset by higher sales. Operating margin rate decreased to 9.4 percent from 11.4 percent principally due to lower net EAC adjustments, largely due to the Q2 2026 unfavorable EAC adjustment on the Stand-in Attack Weapon (SiAW) program and the absence of a prior year favorable EAC adjustment on the EMD phase of the Sentinel program.
|
MISSION SYSTEMS
|
Three Months Ended September 30 | % | Nine Months Ended September 30 | % | |||||||||||||||||||||||||||||||
| $ in millions | 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||
| Sales | $ | 3,155 | $ | 3,093 | 2 | % | $ | 9,266 | $ | 9,057 | 2 | % | |||||||||||||||||||||||
| Operating income | 500 | 515 | (3) | % | 1,434 | 1,317 | 9 | % | |||||||||||||||||||||||||||
| Operating margin rate | 15.8 | % | 16.7 | % | 15.5 | % | 14.5 | % | |||||||||||||||||||||||||||
Sales
Current Quarter
Third quarter 2026 sales increased $62 million, or 2 percent, primarily due to ramp-up on restricted airborne radar programs and higher volume on marine systems programs. These increases were partially offset by lower volume on restricted advanced microelectronics programs.
Year to Date
Year to date 2026 sales increased $209 million, or 2 percent, primarily due to ramp-up on restricted airborne radar programs, higher sales of $255 million on marine systems programs, and the timing of materials on F-35. These increases were partially offset by lower volume on restricted advanced microelectronics programs and a $129 million decrease on the Scalable Agile Beam Radar program.
Operating Income
Current Quarter
Third quarter 2026 operating income decreased $15 million, or 3 percent, primarily due to a lower operating margin rate, partially offset by higher sales. Third quarter 2026 operating margin rate of 15.8 percent reflects strong program performance on marine systems and restricted airborne radar programs. Operating margin rate decreased from 16.7 percent in the third quarter of 2025 due, in part, to a prior year $68 million favorable EAC adjustment in the restricted advanced microelectronics portfolio.
Year to Date
Year to date 2026 operating income increased $117 million, or 9 percent, due to a higher operating margin rate and higher sales. Operating margin rate increased to 15.5 percent from 14.5 percent, primarily due to higher net EAC adjustments driven by improved performance, as well as prior year investments made by the sector in connection with restricted business opportunities.
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SPACE SYSTEMS
|
Three Months Ended September 30 | % | Nine Months Ended September 30 | % | |||||||||||||||||||||||||||||||
| $ in millions | 2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||
| Sales | $ | 2,749 | $ | 2,698 | 2 | % | $ | 7,982 | $ | 7,912 | 1 | % | |||||||||||||||||||||||
| Operating income | 312 | 298 | 5 | % | 783 | 861 | (9) | % | |||||||||||||||||||||||||||
| Operating margin rate | 11.3 | % | 11.0 | % | 9.8 | % | 10.9 | % | |||||||||||||||||||||||||||
Sales
Current Quarter
Third quarter 2026 sales increased $51 million, or 2 percent, primarily due to ramp-up of programs in the restricted space portfolio, partially offset by $136 million of lower sales on Commercial Resupply Service missions due to launch timing.
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Year to Date
Year to date 2026 sales increased $70 million, or 1 percent, primarily due to ramp-up of programs in the restricted space portfolio, $141 million of higher intercompany sales in support of Sentinel, and $107 million of higher GPI sales. These increases were partially offset by a $159 million decrease on the Graphite Epoxy Motor (GEM) 63XL program and a $129 million decrease on the Next-Generation Overhead Persistent Infrared Polar program.
Operating Income
Current Quarter
Third quarter 2026 operating income increased $14 million, or 5 percent, due to a higher operating margin rate and higher sales. Operating margin rate increased to 11.3 percent from 11.0 percent, primarily due to changes in contract mix toward more fixed-price content.
Year to Date
Year to date 2026 operating income decreased $78 million, or 9 percent, primarily due to a lower operating margin rate, partially offset by higher sales. Operating margin rate decreased to 9.8 percent from 10.9 percent, largely due to lower net EAC adjustments, partially offset by changes in contract mix toward more fixed-price content.
PRODUCT AND SERVICE ANALYSIS
The following table presents product and service sales and operating costs and expenses by segment:
| Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||||||
| $ in millions | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||
| Segment Information: | Sales | Operating Costs and Expenses | Sales | Operating Costs and Expenses | Sales | Operating Costs and Expenses | Sales | Operating Costs and Expenses | |||||||||||||||||||||
| Aeronautics Systems | |||||||||||||||||||||||||||||
| Product | $ | 2,736 | $ | 2,463 | $ | 2,296 | $ | 2,108 | $ | 7,870 | $ | 7,180 | $ | 6,715 | $ | 6,575 | |||||||||||||
| Service | 798 | 698 | 804 | 690 | 2,391 | 2,048 | 2,234 | 1,940 | |||||||||||||||||||||
| Intersegment eliminations | 41 | 37 | 42 | 39 | 116 | 105 | 121 | 112 | |||||||||||||||||||||
| Total Aeronautics Systems | 3,575 | 3,198 | 3,142 | 2,837 | 10,377 | 9,333 | 9,070 | 8,627 | |||||||||||||||||||||
| Defense Systems | |||||||||||||||||||||||||||||
| Product | 1,920 | 1,717 | 1,657 | 1,483 | 5,129 | 4,668 | 4,639 | 4,117 | |||||||||||||||||||||
| Service | 328 | 287 | 351 | 297 | 1,004 | 893 | 1,067 | 940 | |||||||||||||||||||||
| Intersegment eliminations | 59 | 53 | 51 | 45 | 166 | 148 | 149 | 132 | |||||||||||||||||||||
| Total Defense Systems | 2,307 | 2,057 | 2,059 | 1,825 | 6,299 | 5,709 | 5,855 | 5,189 | |||||||||||||||||||||
| Mission Systems | |||||||||||||||||||||||||||||
| Product | 2,230 | 1,895 | 2,203 | 1,825 | 6,446 | 5,477 | 6,398 | 5,500 | |||||||||||||||||||||
| Service | 539 | 440 | 551 | 466 | 1,585 | 1,312 | 1,644 | 1,383 | |||||||||||||||||||||
| Intersegment eliminations | 386 | 320 | 339 | 287 | 1,235 | 1,043 | 1,015 | 857 | |||||||||||||||||||||
| Total Mission Systems | 3,155 | 2,655 | 3,093 | 2,578 | 9,266 | 7,832 | 9,057 | 7,740 | |||||||||||||||||||||
| Space Systems | |||||||||||||||||||||||||||||
| Product | 2,212 | 1,956 | 2,213 | 1,980 | 6,419 | 5,817 | 6,396 | 5,702 | |||||||||||||||||||||
| Service | 359 | 321 | 348 | 297 | 1,035 | 909 | 1,149 | 1,021 | |||||||||||||||||||||
| Intersegment eliminations | 178 | 160 | 137 | 123 | 528 | 473 | 367 | 328 | |||||||||||||||||||||
| Total Space Systems | 2,749 | 2,437 | 2,698 | 2,400 | 7,982 | 7,199 | 7,912 | 7,051 | |||||||||||||||||||||
| Segment Totals | |||||||||||||||||||||||||||||
| Total Product | $ | 9,098 | $ | 8,031 | $ | 8,369 | $ | 7,396 | $ | 25,864 | $ | 23,142 | $ | 24,148 | $ | 21,894 | |||||||||||||
| Total Service | 2,024 | 1,746 | 2,054 | 1,750 | 6,015 | 5,162 | 6,094 | 5,284 | |||||||||||||||||||||
|
Total Segment(1)
|
$ | 11,122 | $ | 9,777 | $ | 10,423 | $ | 9,146 | $ | 31,879 | $ | 28,304 | $ | 30,242 | $ | 27,178 | |||||||||||||
(1) A reconciliation of segment operating income to total operating income is included in "Segment Operating Results."
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Product Sales and Costs
Current Quarter
Third quarter 2026 product sales increased $729 million, or 9 percent, primarily due to higher sales on F-35, B-21 and TACAMO at Aeronautics Systems and higher volume on Sentinel, GMLRS ER, and tactical solid rocket motor programs at Defense Systems.
Third quarter 2026 product costs increased $635 million, or 9 percent, consistent with the higher product sales described above.
Year to Date
Year to date 2026 product sales increased $1.7 billion, or 7 percent, primarily due to higher sales on B-21, TACAMO and F-35 at Aeronautics Systems and higher volume on Sentinel, tactical solid rocket motor programs and across the IBCS portfolio at Defense Systems.
Year to date 2026 product costs increased $1.2 billion, or 6 percent, reflecting a higher operating margin rate principally due to the absence of the prior year B-21 loss provision at Aeronautics Systems.
Service Sales and Costs
Current Quarter
Third quarter 2026 service sales decreased $30 million, or 1 percent, primarily due to completion of the Special Electronic Mission Aircraft program at Defense Systems in the prior year.
Third quarter 2026 service costs were comparable with the prior year period.
Year to Date
Year to date 2026 service sales decreased $79 million, or 1 percent, primarily due to lower restricted service sales at Space Systems, lower service volume at Defense Systems due to the training services divestiture, and lower volume on airborne electronic warfare programs at Mission Systems, partially offset by higher restricted service sales at Aeronautics Systems.
Year to date 2026 service costs decreased $122 million, or 2 percent, reflecting a higher operating margin rate principally driven by higher net EAC adjustments on service programs at Aeronautics Systems, Mission Systems and Space Systems.
BACKLOG
Backlog consisted of the following as of September 30, 2026 and December 31, 2025:
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||
| $ in millions | Funded | Unfunded |
Total Backlog |
Total Backlog |
% Change in 2026
|
|||||||||||||||||||||||||||
| Aeronautics Systems | $ | 15,511 | $ | 11,288 | $ | 26,799 | $ | 23,052 | 16 | % | ||||||||||||||||||||||
| Defense Systems | 10,294 | 26,181 | 36,475 | 27,796 | 31 | % | ||||||||||||||||||||||||||
| Mission Systems | 14,442 | 5,533 | 19,975 | 18,632 | 7 | % | ||||||||||||||||||||||||||
| Space Systems | 9,848 | 16,500 | 26,348 | 26,201 | 1 | % | ||||||||||||||||||||||||||
| Total backlog | $ | 50,095 | $ | 59,502 | $ | 109,597 | $ | 95,681 | 15 | % | ||||||||||||||||||||||
Third quarter and year to date 2026 net awards totaled $16.4 billion and $46.2 billion, respectively. Backlog totaled $109.6 billion. Significant third quarter new awards include $4.6 billion for restricted programs (primarily at Aeronautics Systems, Space Systems, and Mission Systems), $2.0 billion for Sentinel, $1.4 billion for Virginia Class submarines, $1.3 billion for F-35 at Aeronautics Systems, and $1.0 billion for E-2.
LIQUIDITY AND CAPITAL RESOURCES
We are focused on the efficient conversion of operating income into cash to provide for the company's material cash requirements, including working capital needs, satisfaction of contractual commitments, funding of our pension and OPB plans, investment in our business through capital expenditures, and shareholder returns.
At September 30, 2026, we had $3.7 billion in cash and cash equivalents. We expect cash and cash equivalents and cash generated from operating activities, supplemented by borrowings under credit facilities, commercial paper and/or in the capital markets, if needed, to be sufficient to provide liquidity to the company in the short-term and long-
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term. The company has a five-year senior unsecured revolving credit facility in an aggregate principal amount of $3.0 billion, and in April 2026, we renewed our one-year $500 million uncommitted credit facility. At September 30, 2026, there were no borrowings outstanding under these credit facilities.
Cash Flow Measures
In addition to our cash position, we consider various cash flow measures in capital deployment decision-making, including cash provided by operating activities and adjusted free cash flow, a non-GAAP measure described in more detail below.
Operating Cash Flow
The table below summarizes key components of cash provided by operating activities:
| Nine Months Ended September 30 | % | ||||||||||||||||
| $ in millions | 2026 | 2025 | Change | ||||||||||||||
| Net earnings | $ | 3,093 | $ | 2,755 | 12 | % | |||||||||||
|
Changes in trade working capital(1)
|
(2,154) | (2,437) | (12) | % | |||||||||||||
| Other, net | 430 | 542 | (21) | % | |||||||||||||
| Net cash provided by operating activities | $ | 1,369 | $ | 860 | 59 | % | |||||||||||
(1)Beginning in the fourth quarter of 2025, the company redefined trade working capital presented in this table to include accounts receivable, unbilled receivables, inventoried costs, trade accounts payable and advance payments and billings in excess of costs incurred. Prior period amounts and disclosures have been recast to conform to the current period presentation.
Year to date 2026 net cash provided by operating activities increased $509 million as compared with the same period in 2025, primarily due to lower net cash tax payments.
Adjusted Free Cash Flow
Adjusted free cash flow, as reconciled in the table below, is a non-GAAP measure defined as net cash provided by or used in operating activities, less capital expenditures, plus proceeds from the sale of equipment to a customer (not otherwise included in net cash provided by or used in operating activities) and the after-tax impact of discretionary pension contributions. Adjusted free cash flow includes proceeds from the sale of equipment to a customer, if any, as such proceeds were generated in a customer sales transaction. It also includes the after-tax impact of discretionary pension contributions, if any, for consistency and comparability of financial performance. This measure may not be defined and calculated by other companies in the same manner. We use adjusted free cash flow as a key factor in our planning for, and consideration of, acquisitions, the payment of dividends and stock repurchases. This non-GAAP measure may be useful to investors and other users of our financial statements as a supplemental measure of our cash performance, but should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating cash flows presented in accordance with GAAP. During the nine months ended September 30, 2026 and 2025, the company made no discretionary pension contributions.
The table below reconciles net cash provided by operating activities to adjusted free cash flow:
| Nine Months Ended September 30 | % | ||||||||||||||||
| $ in millions | 2026 | 2025 | Change | ||||||||||||||
| Net cash provided by operating activities | $ | 1,369 | $ | 860 | 59 | % | |||||||||||
| Capital expenditures | (775) | (788) | (2) | % | |||||||||||||
| Proceeds from sale of equipment to a customer | 371 | - | NM | ||||||||||||||
| Adjusted free cash flow | $ | 965 | $ | 72 | 1,240 | % | |||||||||||
Year to date 2026 adjusted free cash flow increased $893 million, or 1,240 percent, as compared with the same period in 2025, primarily due to higher net cash from operating activities and proceeds received in connection with the sale of equipment to a customer.
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Investing Cash Flow
Year to date 2026 net cash used in investing activities decreased $177 million, or 36 percent, as compared with the same period in 2025, principally due to $371 million of proceeds from the sale of equipment to a customer and $107 million of proceeds from the sale of an investment, partially offset by $333 million of proceeds from the training services divestiture in the prior year.
Financing Cash Flow
Year to date 2026 net cash used in financing activities decreased $1.1 billion, or 38 percent, as compared with the same period in 2025, primarily due to a $1.1 billion decrease in share repurchases.
Credit Facilities, Commercial Paper and Financial Arrangements - See Note 7 to the financial statements for further information on our credit facilities, commercial paper and our use of standby letters of credit and guarantees.
Share Repurchases - See Note 2 to the financial statements for further information on our share repurchase programs.
Long-term Debt - See Note 5 to the financial statements for further information.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no material changes to our critical accounting policies and estimates from those discussed in our 2025 Annual Report on Form 10-K.
ACCOUNTING STANDARDS UPDATES
See Note 1 to our financial statements for further information on accounting standards updates.
FORWARD-LOOKING STATEMENTS AND PROJECTIONS
This Form 10-Q and the information we are incorporating by reference contain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "expect," "anticipate," "intend," "may," "could," "should," "plan," "project," "forecast," "believe," "estimate," "guidance," "outlook," "trends," "goals" and similar expressions generally identify these forward-looking statements. Forward-looking statements include, among other things, statements relating to our future financial condition, results of operations and/or cash flows. Forward-looking statements are based upon assumptions, expectations, plans and projections that we believe to be reasonable when made, but which may change over time. These statements are not guarantees of future performance and inherently involve a wide range of risks and uncertainties that are difficult to predict. Specific risks that could cause actual results to differ materially from those expressed or implied in these forward-looking statements include, but are not limited to, those identified and discussed more fully in the section entitled "Risk Factors" in our 2025 Annual Report on Form 10-K and from time to time in our other filings with the SEC. They include:
Industry and Economic Risks
•our dependence on the U.S. government for a substantial portion of our business
•significant delays or reductions in appropriations and/or for our programs, and U.S. government funding and program support more broadly, including as a result of a prolonged continuing resolution and/or government shutdown, and/or related to the global security environment or other global events
•significant delays or reductions in payments as a result of or related to a breach of the debt ceiling or a prolonged government shutdown
•the use of estimates when accounting for our contracts and the effect of contract cost growth and our efforts to recover or offset such costs and/or changes in estimated contract costs and revenues, including as a result of inflationary pressures, labor shortages, supply chain challenges, changes in trade policies and/or other macroeconomic factors, and risks related to management's judgments and assumptions in estimating and/or projecting contract revenue and performance which may be inaccurate
•increased competition within our markets and bid protests
•continued pressures from macroeconomic trends, including on costs, schedules, performance and ability to meet expectations
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NORTHROP GRUMMAN CORPORATION
Legal and Regulatory Risks
•investigations, claims, disputes, enforcement actions, litigation (including criminal, civil and administrative) and/or other legal proceedings
•changes in procurement and other laws, SEC, DoW and other rules and regulations, including changes through executive orders, contract terms and practices applicable to our industry, findings by the U.S. government as to our compliance with such requirements, more aggressive enforcement of such requirements and changes in our customers' business practices and preferences globally
•the improper conduct of employees, agents, subcontractors, suppliers, business partners or joint ventures in which we participate, including the impact on our reputation and our ability to do business
•environmental matters, unforeseen environmental costs and government and third-party claims
•unanticipated changes in our tax provisions or exposure to additional tax liabilities
Business and Operational Risks
•cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners, including threats or disruptions from the use of artificial intelligence models capable of exploiting vulnerabilities to conduct or enhance cyber attacks, and changes in related regulations
•the performance and viability of our subcontractors and suppliers and the availability and pricing of raw materials, critical minerals and metals, chemicals, parts and components, particularly with inflationary pressures, increased costs, pricing changes, shortages in labor and financial resources, supply chain disruptions, and extended material lead times
•our ability to attract and retain a qualified and talented workforce with the necessary security clearances to meet our performance obligations
•our exposure to additional risks as a result of our international business, including risks related to global security and strategic alliances, geopolitical and economic factors, misconduct, suppliers, laws and regulations
•our ability to innovate, develop new products and technologies, progress and benefit from digital transformation and maintain technologies to meet the needs of our customers
•natural disasters, epidemics, pandemics and similar outbreaks and other significant disruptions
•products and services we provide related to hazardous and high risk operations, including the production and use of such products, which subject us to various environmental, regulatory, financial, reputational and other risks
•our ability appropriately to protect and exploit intellectual property rights
General and Other Risk Factors
•the adequacy and availability of, and ability to obtain, insurance coverage, customer indemnifications or other liability protections
•the future investment performance of plan assets, gains or losses associated with changes in valuation of marketable securities related to our non-qualified benefit plans, changes in actuarial assumptions associated with our pension and other postretirement benefit plans and legislative or other regulatory actions impacting our pension and postretirement benefit obligations
•changes in business conditions that could impact business investments and/or recorded goodwill or the value of other long-lived assets, and other potential future liabilities
You are urged to consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of forward-looking statements. These forward-looking statements speak only as of the date this report is first filed or, in the case of any document incorporated by reference, the date of that document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
Northrop Grumman Corporation published this content on October 20, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 20, 2026 at 20:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]