Northrop Grumman Reports First Quarter 2026 Financial Results (Form 8-K)

Northrop Grumman Reports First Quarter 2026 Financial Results

•Reached agreements with the U.S. Air Force to increase B-21 production capacity and accelerate Sentinel initial operating capability

•Continued strong demand with net awards of $9.8 billion and backlog of $96 billion

•Sales increase 4 percent to $9.9 billion; organic sales1 increase 5 percent

•Operating income and margin rate increase to $989 million and 10.0 percent, respectively

•Diluted earnings per share (EPS) increases to $6.14

•Company reaffirms 2026 financial guidance for sales, segment operating income1, MTM-adjusted EPS1, and free cash flow1

FALLS CHURCH, Va. - April 21, 2026 - Northrop Grumman Corporation (NYSE: NOC) reported first quarter 2026 sales increased 4 percent to $9.9 billion, as compared with $9.5 billion in the first quarter of 2025. First quarter sales reflect continued strong demand for our global capabilities. First quarter 2026 net earnings totaled $875 million, or $6.14 per diluted share, as compared with $481 million, or $3.32 per diluted share, in the first quarter of 2025.

"Northrop Grumman delivered strong first quarter results, with continued robust bookings, mid-single-digit organic sales growth, and solid operating performance, underscoring our ability to deliver in today's unprecedented global demand environment," said Kathy Warden, chair, chief executive officer and president. "With our diverse portfolio, robust manufacturing capacity, and proven performance, we're delivering differentiating technology at speed and scale in support of our customers' needs."

1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com

Consolidated Operating Results and Cash Flows

			Three Months Ended March 31
$ in millions, except per share amounts			2026						2025						Change
Sales
Aeronautics Systems			$	3,283					$	2,814					17		%
Defense Systems			1,899						1,805						5		%
Mission Systems			2,861						2,807						2		%
Space Systems			2,480						2,568						(3)		%
Intersegment eliminations			(642)						(526)
Total sales			9,881						9,468						4		%
Operating income (loss)
Aeronautics Systems			305						(183)						NM
Defense Systems			184						179						3		%
Mission Systems			433						361						20		%
Space Systems			235						283						(17)		%
Intersegment eliminations			(85)						(72)
Segment operating income1			1,072						568						89		%
Segment operating margin rate1			10.8		%				6.0		%				480 bps
FAS/CAS operating adjustment			7						63						(89)		%
Unallocated corporate expense:
Intangible asset amortization and PP&E step-up depreciation			(21)						(21)						-		%
Other unallocated corporate expense			(69)						(37)						86		%
Unallocated corporate expense			(90)						(58)						55		%
Total operating income			$	989					$	573					73		%
Operating margin rate			10.0		%				6.1		%				390 bps
Interest expense			(162)						(156)						4		%
Non-operating FAS pension benefit			166						130						28		%
Other, net			37						31						19		%
Earnings before income taxes			1,030						578						78		%
Federal and foreign income tax expense			155						97						60		%
Effective income tax rate			15.0		%				16.8		%				(180) bps
Net earnings			$	875					$	481					82		%
Diluted earnings per share			6.14						3.32						85		%
Weighted-average diluted shares outstanding, in millions			142.5						144.9						(2)		%
Net cash used in operating activities			$	(1,656)					$	(1,565)					(6)		%
Capital expenditures			(167)						(256)						(35)		%
Free cash flow1			$	(1,823)					$	(1,821)					-		%

1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com

Sales

			Three Months Ended March 31												%
$ in millions			2026						2025						Change
Sales			$	9,881					$	9,468					4		%
Less: Training services sales			-						(72)
Organic sales1			$	9,881					$	9,396					5		%

First quarter 2026 sales increased $413 million, or 4 percent, due to higher sales of $469 million at Aeronautics Systems, as well as higher sales at Defense Systems and Mission Systems. These increases were partially offset by $116 million of higher intercompany eliminations and lower sales at Space Systems due to the wind-down of work on the Next Generation Interceptor (NGI) program.

Operating Income and Margin Rate

First quarter 2026 operating income increased $416 million, or 73 percent, largely driven by the prior year $477 million B-21 loss provision at Aeronautics Systems, partially offset by a $56 million decrease in the FAS/CAS operating adjustment. Operating margin rate increased to 10.0 percent from 6.1 percent reflecting the items above.

Segment Operating Income and Margin Rate1

First quarter 2026 segment operating income1 increased $504 million, or 89 percent, primarily due to $488 million of higher operating income at Aeronautics Systems and $72 million of higher operating income at Mission Systems, partially offset by $48 million of lower operating income at Space Systems. Segment operating margin rate1 increased to 10.8 percent from 6.0 percent primarily due to a higher operating margin rate at Aeronautics Systems and Mission Systems, partially offset by a lower operating margin rate at Space Systems.

Federal and Foreign Income Taxes

First quarter 2026 income tax expense increased $58 million, or 60 percent, due to $452 million of higher earnings before income taxes, partially offset by a lower effective tax rate (ETR). The first quarter 2026 ETR decreased to 15.0 percent from 16.8 percent primarily due to higher research credits, including a benefit related to Corporate Alternative Minimum Tax guidance recently issued by the IRS.

Net Earnings

First quarter 2026 net earnings increased $394 million, or 82 percent, primarily due to the $416 million increase in operating income described above and a $36 million increase in the non-operating FAS pension benefit, partially offset by a $58 million increase in income tax expense.

Cash Flows

First quarter 2026 net cash used in operating activities was comparable with the same period in 2025. Net cash used in operating activities reflects increases in trade working capital, consistent with the company's historical timing of operating cash flows, which are generally more heavily weighted towards the second half of the year. First quarter 2026 free cash flow1 was comparable with the prior year period and reflects a $91 million increase in net cash used in operating activities and an $89 million reduction in capital expenditures.

1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com

Awards and Backlog

First quarter 2026 net awards totaled $9.8 billion, and backlog totaled $95.6 billion. Significant first quarter new awards include $4.9 billion for restricted programs (primarily at Aeronautics Systems, Space Systems, and Mission Systems), $0.5 billion for F-35 (primarily at Aeronautics Systems), $0.5 billion for infrared countermeasures programs, and $0.4 billion for Triton.

Segment Operating Results

AERONAUTICS SYSTEMS			Three Months Ended March 31												%
$ in millions			2026						2025						Change
Sales			$	3,283					$	2,814					17		%
Operating income (loss)			305						(183)						NM
Operating margin rate			9.3		%				(6.5)		%

Sales

First quarter 2026 sales increased $469 million, or 17 percent, primarily due to higher sales on B-21 and other restricted programs as well as increased volume on the E-130J TACAMO program as it ramps up. 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

First quarter 2026 operating income increased $488 million and operating margin rate increased to 9.3 percent primarily due to the absence of the prior year B-21 loss provision.

DEFENSE SYSTEMS			Three Months Ended March 31												%
$ in millions			2026						2025						Change
Sales			$	1,899					$	1,805					5		%
Less: Training services sales			-						(72)
Organic sales1			$	1,899					$	1,733					10		%
Operating income			$	184					$	179					3		%
Operating margin rate			9.7		%				9.9		%

Sales

First quarter 2026 sales increased $94 million, or 5 percent, primarily due to higher volume on Sentinel as that program continues to ramp, as well as higher volume on tactical solid rocket motor programs and across the Integrated Battle Command System portfolio. These increases were partially offset by a $72 million reduction in sales related to the divested training services business.

Operating Income

First quarter 2026 operating income increased $5 million, or 3 percent, primarily due to higher sales, partially offset by a lower operating margin rate. Operating margin rate decreased to 9.7 percent from 9.9 percent principally due to lower net EAC adjustments.

1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com

MISSION SYSTEMS			Three Months Ended March 31												%
$ in millions			2026						2025						Change
Sales			$	2,861					$	2,807					2		%
Operating income			433						361						20		%
Operating margin rate			15.1		%				12.9		%

Sales

First quarter 2026 sales increased $54 million, or 2 percent, primarily due to ramp-up on restricted airborne radar programs and higher volume on marine systems programs, partially offset by lower volume on the Scalable Agile Beam Radar program and airborne electronic warfare programs.

Operating Income

First quarter 2026 operating income increased $72 million, or 20 percent, primarily due to a higher operating margin rate and higher sales. Operating margin rate increased to 15.1 percent from 12.9 percent, primarily due to prior year investments made by the sector in connection with restricted business opportunities, as well as higher net EAC adjustments in the current year.

SPACE SYSTEMS			Three Months Ended March 31												%
$ in millions			2026						2025						Change
Sales			$	2,480					$	2,568					(3)		%
Operating income			235						283						(17)		%
Operating margin rate			9.5		%				11.0		%

Sales

First quarter 2026 sales decreased $88 million, or 3 percent, primarily due to wind-down of work on the NGI program, which reduced sales by $98 million, as well as lower sales on the Graphite Epoxy Motor (GEM) 63XL program related to the unfavorable EAC adjustment described below. These decreases were partially offset by higher volume on Space Development Agency satellite programs driven by ramp-up on the Tranche 3 tracking layer award.

Operating Income

First quarter 2026 operating income decreased $48 million, or 17 percent, due to a lower operating margin rate and lower sales. Operating margin rate decreased to 9.5 percent from 11.0 percent, largely due to lower net EAC adjustments, including a $71 million unfavorable adjustment on GEM 63XL associated with a launch anomaly that occurred during the first quarter.

1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com

Guidance

Financial guidance, as well as outlook, trends, expectations and other forward-looking statements provided by the company for 2026 and beyond, reflect the company's judgment based on the information available to the company at the time of this release. The company's financial guidance and outlook for 2026 and beyond reflect what the company currently anticipates will be the impacts on the company from, among other factors, the global macroeconomic, security, and political/budget environments, including the impacts from inflationary pressures and labor and supply chain challenges; changes in the threat environment; changes in government budget, appropriations and procurement priorities and processes; changes in the regulatory environment, including trade policy; and changes in support for our programs. We are not assuming, and the company's financial guidance and outlook for 2026 and beyond do not reflect impacts on the company from, a prolonged government shutdown, or application of spending limits or other spending cuts. However, the company cannot predict how these factors will evolve or what impacts they will have, and there can be no assurance that the company's current expectations or underlying assumptions are correct. These factors can affect the company's ability to achieve guidance or meet expectations.

For additional factors that may impact the company's ability to achieve guidance or meet expectations, please see the "Forward-Looking Statements" section in this release and our Form 10-Q.

2026 Guidance
($ in millions, except per share amounts)			As of 4/21/2026
Sales			$43,500 - $44,000
						Segment operating income1			$4,850 - $5,000
MTM-adjusted EPS1			$27.40 - $27.90
						Free cash flow1			$3,100 - $3,500

2026 Segment Guidance

As of 4/21/2026

Sales ($B)

OM Rate %

Aeronautics Systems

Mid $13

Low to Mid 9%

Defense Systems

Mid to High $8

~10%

Mission Systems

High $12

High 14%

Space Systems

~$11

~11%

Intersegment Eliminations

~($2.4)

High 13%

1			Non-GAAP measure - see definitions at the end of this earnings release.

Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com

About Northrop Grumman

Northrop Grumman will webcast its earnings conference call at 9:30 a.m. Eastern Time on April 21, 2026. A live audio broadcast of the conference call will be available on the investor relations page of the company's website at www.northropgrumman.com.

Northrop Grumman is a leading global aerospace and defense technology company. Our pioneering solutions equip our customers with the capabilities they need to connect and protect the world, and push the boundaries of human exploration across the universe. Driven by a shared purpose to solve our customers' toughest problems, our employees define possible every day.

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