10-QPeriod: Q1 FY2026

NORTHROP GRUMMAN CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2026

Filed April 21, 2026For Securities:NOC

Summary

Northrop Grumman Corporation reported strong financial performance for the first quarter ended March 31, 2026. Total sales increased by 4% year-over-year to $9.88 billion. Notably, the company's operating income saw a significant surge of 73%, reaching $989 million, and the operating margin rate improved to 10.0% from 6.1% in the prior year period. This improvement was primarily driven by the absence of a substantial loss provision related to the B-21 program that impacted the prior year's results, as well as favorable contract adjustments across segments. Net earnings also saw a substantial increase of 82% to $875 million, resulting in a diluted earnings per share of $6.14, up from $3.32 in the same period last year. The company generated $95.6 billion in backlog as of March 31, 2026, indicating a strong pipeline of future work. While the company experienced a net cash usage of $1.66 billion from operating activities, this is consistent with historical trends and is expected to be managed through existing liquidity and potential further financing. The company maintained its financial strength with $2.1 billion in cash and cash equivalents. Key operational highlights include the agreement to expand B-21 production capacity, which is expected to improve long-term program returns. The company continues to navigate a dynamic global security and economic environment, with a significant portion of its revenue still derived from U.S. government contracts. Despite ongoing supply chain and inflationary pressures, Northrop Grumman has demonstrated resilience and a strong ability to manage its costs and improve profitability in the current quarter.

Financial Highlights

48 data points
Beta

Revenue

$9.88B

Net Income

$875.00M

8.9% Net Margin

EPS (Diluted)

$6.14

Total Assets

$50.01B

Cash & Equivalents

$2.09B

Free Cash Flow

-$1.82B

Financial Statements
Beta
Revenue$9.88B
Operating Expenses$8.89B
Operating Income$989.00M
Net Income$875.00M
EPS (Basic)$6.16
EPS (Diluted)$6.14
Shares Outstanding (Basic)142.10M
Shares Outstanding (Diluted)142.50M

Key Highlights

  • 1Total sales increased 4% to $9.88 billion in Q1 2026.
  • 2Operating income surged 73% to $989 million, with the operating margin rate improving to 10.0%.
  • 3Net earnings rose 82% to $875 million, and diluted EPS grew to $6.14.
  • 4Backlog remained robust at $95.6 billion as of March 31, 2026.
  • 5Aeronautics Systems segment performance significantly improved due to the absence of prior-year B-21 program losses.
  • 6The company reached an agreement to expand production capacity and increase the aircraft production rate for the B-21 program.
  • 7Cash and cash equivalents stood at $2.09 billion, though net cash used in operating activities was $1.66 billion.

Frequently Asked Questions

The substantial increase in operating income and net earnings was primarily driven by the absence of a large loss provision recorded in the prior year's first quarter related to the B-21 program. Additionally, favorable net EAC (Estimate at Completion) adjustments across various segments and improved sales, particularly at Aeronautics Systems, contributed to the strong performance.

Northrop Grumman reported net cash used in operating activities of $1.66 billion for the quarter. This is consistent with historical patterns, where operating cash flows tend to be more heavily weighted towards the second half of the year. The company maintains $2.09 billion in cash and cash equivalents and has access to a $3.0 billion revolving credit facility and a commercial paper program to manage its liquidity needs.

The company has reached an agreement with the U.S. Air Force to expand production capacity and increase the aircraft production rate for the B-21 program. While this expansion is expected to improve long-term returns, it also involves significant investment. The company reviewed its estimated profitability on the LRIP phase and made no significant changes to the previously recognized loss, though there was a $157 million unfavorable EAC adjustment on the first four LRIP lots due to higher estimated production costs and the impact of the new agreement.

Northrop Grumman operates in a dynamic global security environment marked by heightened tensions. The company's broad portfolio supports national security priorities and is well-aligned with U.S. government needs. While facing global economic challenges like inflation and supply chain disruptions, the company is actively working with suppliers and expects its capabilities, particularly in strategic areas, to drive long-term growth. A significant portion of its revenue remains tied to U.S. government contracts.