SEC Form 10-Q filed by Northrop Grumman Corporation

7/21/26 4:02:01 PM ET

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2026


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-16411

NORTHROP GRUMMAN CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		80-0640649
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2980 Fairview Park Drive
Falls Church,	Virginia	22042
(Address of principal executive offices)		(Zip Code)

(703) 280-2900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	NOC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large Accelerated Filer ☒ Accelerated Filer ☐

Non-accelerated Filer ☐ Smaller Reporting Company ☐

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 16, 2026, 142,063,026 shares of common stock were outstanding.


		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Earnings and Comprehensive Income	1
	Condensed Consolidated Statements of Financial Position	2
	Condensed Consolidated Statements of Cash Flows	3
	Condensed Consolidated Statements of Changes in Shareholders’ Equity	4
	Notes to Condensed Consolidated Financial Statements
	1. Summary of Significant Accounting Policies	5
	2. Earnings Per Share, Share Repurchases and Dividends on Common Stock	8
	3. Inventoried Costs, Net	8
	4. Income Taxes	9
	5. Fair Value of Financial Instruments	9
	6. Investigations, Claims and Litigation	11
	7. Commitments and Contingencies	11
	8. Retirement Benefits	13
	9. Stock Compensation Plans and Other Compensation Arrangements	13
	10. Segment Information	14
	Report of Independent Registered Public Accounting Firm	21
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Overview	22
	Consolidated Operating Results	25
	Segment Operating Results	27
	Product and Service Analysis	32
	Backlog	33
	Liquidity and Capital Resources	33
	Critical Accounting Policies, Estimates and Judgments	35
	Accounting Standards Updates	35
	Forward-Looking Statements and Projections	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
	Signatures	40


	Three Months Ended June 30				Six Months Ended June 30
$ in millions, except per share amounts	2026		2025		2026		2025
Sales
Product	$	8,808	$	8,258	$	16,766	$	15,779
Service	2,068		2,093		3,991		4,040
Total sales	10,876		10,351		20,757		19,819
Operating costs and expenses
Product	7,155		6,526		13,588		12,892
Service	1,600		1,615		3,088		3,137
General and administrative expenses	1,025		1,016		1,996		2,023
Total operating costs and expenses	9,780		9,157		18,672		18,052
Gain on sale of business	—		231		—		231
Operating income	1,096		1,425		2,085		1,998
Other (expense) income
Interest expense	(161)		(173)		(323)		(329)
Non-operating FAS pension benefit	166		137		332		267
Other, net	67		38		104		69
Earnings before income taxes	1,168		1,427		2,198		2,005
Federal and foreign income tax expense	74		253		229		350
Net earnings	$	1,094	$	1,174	$	1,969	$	1,655

Basic earnings per share	$	7.70	$	8.17	$	13.86	$	11.48
Weighted-average common shares outstanding, in millions	142.1		143.7		142.1		144.2
Diluted earnings per share	$	7.68	$	8.15	$	13.83	$	11.45
Weighted-average diluted shares outstanding, in millions	142.4		144.0		142.4		144.5

Net earnings (from above)	$	1,094	$	1,174	$	1,969	$	1,655
Other comprehensive (loss) income, net of tax
Change in cumulative translation adjustment	—		7		(2)		9
Change in other, net	(3)		11		(6)		19
Other comprehensive (loss) income, net of tax	(3)		18		(8)		28
Comprehensive income	$	1,091	$	1,192	$	1,961	$	1,683


$ in millions, except par value	June 30, 2026		December 31, 2025
Assets
Cash and cash equivalents	$	2,307	$	4,403
Accounts receivable, net	2,311		1,375
Unbilled receivables, net	7,953		6,544
Inventoried costs, net	1,415		1,309
Prepaid expenses and other current assets	1,604		1,656
Total current assets	15,590		15,287
Property, plant and equipment, net of accumulated depreciation of $10,061 for 2026 and $9,648 for 2025	10,297		10,972
Operating lease right-of-use assets	1,901		1,859
Goodwill	17,439		17,437
Deferred tax assets	598		1,051
Pension and other postretirement benefit plan assets	3,447		3,167
Other non-current assets	1,491		1,604
Total assets	$	50,763	$	51,377

Liabilities
Trade accounts payable	$	2,895	$	3,240
Accrued employee compensation	1,991		2,309
Advance payments and billings in excess of costs incurred	3,823		4,086
Other current liabilities	4,636		4,247
Total current liabilities	13,345		13,882
Long-term debt, net of current portion of $763 for 2026 and $534 for 2025	14,428		15,162
Pension and other postretirement benefit plan liabilities	1,086		1,110
Operating lease liabilities	1,861		1,857
Other non-current liabilities	2,159		2,692
Total liabilities	32,879		34,703

Commitments and contingencies (Note 7)

Shareholders’ equity
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $1 par value; 800,000,000 shares authorized; issued and outstanding: 2026—142,062,680 and 2025—141,997,194	142		142
Paid-in capital	37		—
Retained earnings	17,839		16,658
Accumulated other comprehensive loss	(134)		(126)
Total shareholders’ equity	17,884		16,674
Total liabilities and shareholders’ equity	$	50,763	$	51,377


	Six Months Ended June 30
$ in millions	2026		2025
Operating activities
Net earnings	$	1,969	$	1,655
Adjustments to reconcile to net cash used in operating activities:
Depreciation and amortization	739		687
Stock-based compensation	49		40
Deferred income taxes	453		(114)
B-21 loss provision	—		477
Gain on sale of business	—		(231)
Net periodic pension and OPB income	(240)		(169)
Pension and OPB contributions	(63)		(62)
Changes in assets and liabilities:
Accounts receivable, net	(936)		(929)
Unbilled receivables, net	(860)		(1,343)
Inventoried costs, net	(118)		(102)
Prepaid expenses and other assets	141		21
Trade accounts payable	(345)		(2)
Advance payments and billings in excess of costs incurred	(263)		(70)
Other liabilities	(836)		(420)
Income taxes payable, net	(38)		(145)
Other operating activities	(28)		10
Net cash used in operating activities	(376)		(697)

Investing activities
Capital expenditures	(469)		(487)
Proceeds from sale of investment	107		—
Divestiture of training services business	—		333
Other investing activities	(2)		(37)
Net cash used in investing activities	(364)		(191)

Financing activities
Net proceeds from issuance of long-term debt	—		998
Payments of long-term debt	(527)		(1,500)
Net borrowings on commercial paper	—		566
Common stock repurchases	(68)		(891)
Cash dividends paid	(684)		(634)
Payments of employee taxes withheld from share-based awards	(58)		(38)
Other financing activities	(19)		(67)
Net cash used in financing activities	(1,356)		(1,566)
Decrease in cash and cash equivalents	(2,096)		(2,454)
Cash and cash equivalents, beginning of year	4,403		4,353
Cash and cash equivalents, end of period	$	2,307	$	1,899


	Three Months Ended June 30				Six Months Ended June 30
$ in millions, except per share data	2026		2025		2026		2025
Revenue	$	112	$	164	$	104	$	202
Operating income	94		126		14		26
Net earnings(1)	74		100		11		21
Diluted earnings per share(1)	0.52		0.69		0.08		0.15


	Three Months Ended June 30								Six Months Ended June 30
	Pension Benefits				OPB				Pension Benefits				OPB
$ in millions	2026		2025		2026		2025		2026		2025		2026		2025
Components of net periodic benefit cost (benefit)
Service cost	$	53	$	54	$	1	$	1	$	106	$	108	$	2	$	2
Interest cost	399		402		14		15		798		805		29		31
Expected return on plan assets	(565)		(539)		(22)		(21)		(1,130)		(1,079)		(44)		(42)
Amortization of prior service credit	—		—		—		—		—		—		(1)		(1)
Other	—		—		—		—		—		7		—		—
Net periodic benefit cost (benefit)	$	(113)	$	(83)	$	(7)	$	(5)	$	(226)	$	(159)	$	(14)	$	(10)


	Six Months Ended June 30
in millions	2026		2025
RSRs granted	0.1		0.1
RPSRs granted	0.1		0.1
Grant date aggregate fair value	$	142	$	104


Sales by Customer Type	Three Months Ended June 30								Six Months Ended June 30
	2026				2025				2026				2025
$ in millions	$		%(3)		$		%(3)		$		%(3)		$		%(3)
Aeronautics Systems
U.S. government(1)	$	2,809	81	%	$	2,526	82	%	$	5,503	82	%	$	4,816	82	%
International(2)	652		19	%	544		18	%	1,192		18	%	1,022		18	%
Other customers	17		—	%	6		—	%	32		—	%	11		—	%
Intersegment sales	41				38				75				79
Aeronautics Systems sales	3,519				3,114				6,802				5,928
Defense Systems
U.S. government(1)	1,738		85	%	1,611		83	%	3,329		86	%	3,062		83	%
International(2)	279		14	%	305		16	%	514		13	%	594		16	%
Other customers	21		1	%	22		1	%	42		1	%	42		1	%
Intersegment sales	55				53				107				98
Defense Systems sales	2,093				1,991				3,992				3,796
Mission Systems
U.S. government(1)	2,180		78	%	2,282		81	%	4,159		79	%	4,255		80	%
International(2)	563		20	%	505		18	%	1,027		20	%	980		19	%
Other customers	43		2	%	29		1	%	76		1	%	53		1	%
Intersegment sales	464				341				849				676
Mission Systems sales	3,250				3,157				6,111				5,964
Space Systems
U.S. government(1)	2,500		97	%	2,349		93	%	4,700		96	%	4,658		93	%
International(2)	49		2	%	47		2	%	91		2	%	91		2	%
Other customers	25		1	%	125		5	%	92		2	%	235		5	%
Intersegment sales	179				125				350				230
Space Systems sales	2,753				2,646				5,233				5,214
Total
U.S. government(1)	9,227		85	%	8,768		85	%	17,691		85	%	16,791		85	%
International(2)	1,543		14	%	1,401		13	%	2,824		14	%	2,687		13	%
Other customers	106		1	%	182		2	%	242		1	%	341		2	%
Total Sales	$	10,876			$	10,351			$	20,757			$	19,819


Sales by Contract Type	Three Months Ended June 30								Six Months Ended June 30
	2026				2025				2026				2025
$ in millions	$		%(1)		$		%(1)		$		%(1)		$		%(1)
Aeronautics Systems
Cost-type	$	1,607	46	%	$	1,461	47	%	$	2,966	44	%	$	2,800	48	%
Fixed-price	1,871		54	%	1,615		53	%	3,761		56	%	3,049		52	%
Intersegment sales	41				38				75				79
Aeronautics Systems sales	3,519				3,114				6,802				5,928
Defense Systems
Cost-type	1,161		57	%	1,084		56	%	2,227		57	%	2,049		55	%
Fixed-price	877		43	%	854		44	%	1,658		43	%	1,649		45	%
Intersegment sales	55				53				107				98
Defense Systems sales	2,093				1,991				3,992				3,796
Mission Systems
Cost-type	1,075		39	%	1,406		50	%	2,256		43	%	2,569		49	%
Fixed-price	1,711		61	%	1,410		50	%	3,006		57	%	2,719		51	%
Intersegment sales	464				341				849				676
Mission Systems sales	3,250				3,157				6,111				5,964
Space Systems
Cost-type	1,394		54	%	1,562		62	%	2,724		56	%	3,102		62	%
Fixed-price	1,180		46	%	959		38	%	2,159		44	%	1,882		38	%
Intersegment sales	179				125				350				230
Space Systems sales	2,753				2,646				5,233				5,214
Total
Cost-type	5,237		48	%	5,513		53	%	10,173		49	%	10,520		53	%
Fixed-price	5,639		52	%	4,838		47	%	10,584		51	%	9,299		47	%
Total Sales	$	10,876			$	10,351			$	20,757			$	19,819


Sales by Geographic Region(1)	Three Months Ended June 30								Six Months Ended June 30
	2026				2025				2026				2025
$ in millions	$		%(3)		$		%(3)		$		%(3)		$		%(3)
Aeronautics Systems
United States	$	2,826	81	%	$	2,532	82	%	$	5,535	82	%	$	4,827	82	%
Asia/Pacific	263		7	%	226		8	%	492		7	%	426		8	%
Europe	369		11	%	301		10	%	658		10	%	570		10	%
Other geographic regions	20		1	%	17		—	%	42		1	%	26		—	%
Intersegment sales	41				38				75				79
Aeronautics Systems sales	3,519				3,114				6,802				5,928
Defense Systems
United States	1,759		86	%	1,633		84	%	3,371		87	%	3,104		84	%
Asia/Pacific	110		6	%	79		4	%	191		5	%	160		4	%
Europe	129		6	%	168		9	%	254		6	%	338		9	%
Other geographic regions	40		2	%	58		3	%	69		2	%	96		3	%
Intersegment sales	55				53				107				98
Defense Systems sales	2,093				1,991				3,992				3,796
Mission Systems
United States	2,223		80	%	2,311		82	%	4,235		80	%	4,308		81	%
Asia/Pacific	148		5	%	132		5	%	262		5	%	260		5	%
Europe	302		11	%	263		9	%	554		11	%	502		10	%
Other geographic regions	113		4	%	110		4	%	211		4	%	218		4	%
Intersegment sales	464				341				849				676
Mission Systems sales	3,250				3,157				6,111				5,964
Space Systems
United States	2,525		98	%	2,474		98	%	4,792		98	%	4,893		98	%
Asia/Pacific	15		1	%	15		1	%	33		1	%	23		—	%
Europe	28		1	%	20		1	%	48		1	%	46		2	%
Other geographic regions	6		—	%	12		—	%	10		—	%	22		—	%
Intersegment sales	179				125				350				230
Space Systems sales	2,753				2,646				5,233				5,214
Total
United States	9,333		86	%	8,950		87	%	17,933		86	%	17,132		87	%
Asia/Pacific	536		5	%	452		4	%	978		5	%	869		4	%
Europe	828		7	%	752		7	%	1,514		7	%	1,456		7	%
Other geographic regions(2)	179		2	%	197		2	%	332		2	%	362		2	%
Total Sales	$	10,876			$	10,351			$	20,757			$	19,819


	June 30, 2026								December 31, 2025
$ in millions	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial Assets
Marketable securities	$	402	$	—	$	22	$	424	$	454	$	—	$	24	$	478
Marketable securities valued using NAV							4								5
Total marketable securities	402		—		22		428		454		—		24		483
Derivatives	—		1		—		1		—		2		—		2


/s/			Deloitte & Touche LLP
			McLean, Virginia
			July 20, 2026


	Three Months Ended June 30				Six Months Ended June 30
$ in millions	2026		2025		2026		2025
Favorable EAC adjustments	$	565	$	404	$	1,225	$	728
Unfavorable EAC adjustments	(471)		(278)		(1,211)		(702)
Net EAC adjustments	$	94	$	126	$	14	$	26


	June 30, 2026						December 31, 2025
$ in millions	Funded		Unfunded		Total Backlog		Total Backlog		% Change in 2026
Aeronautics Systems	$	13,394	$	11,174	$	24,568	$	23,052	7	%
Defense Systems	9,392		25,286		34,678		27,796		25	%
Mission Systems	12,878		5,587		18,465		18,632		(1)	%
Space Systems	10,281		16,700		26,981		26,201		3	%
Total backlog	$	45,945	$	58,747	$	104,692	$	95,681	9	%


*+10.1			Non-Employee Director Compensation Term Sheet, effective May 20, 2026

*15			Letter from Independent Registered Public Accounting Firm

*31.1			Certification of Kathy J. Warden pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*31.2			Certification of John T. Greene pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

**32.1			Certification of Kathy J. Warden pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

**32.2			Certification of John T. Greene pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*101			Northrop Grumman Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted as inline XBRL (Extensible Business Reporting Language): (i) the Cover Page, (ii) Condensed Consolidated Statements of Earnings and Comprehensive Income, (iii) Condensed Consolidated Statements of Financial Position, (iv) Condensed Consolidated Statements of Cash Flows, (v) Condensed Consolidated Statements of Changes in Shareholders’ Equity, (vi) Notes to Condensed Consolidated Financial Statements, and (vii) Other Information. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


+			Management contract or compensatory plan or arrangement

*			Filed with this report

**			Furnished with this report


NORTHROP GRUMMAN CORPORATION (Registrant)

By:						/s/ Michael A. Hardesty
						Michael A. Hardesty Corporate Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)

Date	Price Target	Rating	Analyst
4/1/2026	$800.00	Overweight	Wells Fargo
1/9/2026	$623.00	Buy → Hold	Truist
12/15/2025	$662.00	Neutral → Overweight	Alembic Global Advisors
12/12/2025	$654.00	Buy	Citigroup
11/18/2025	$710.00	Outperform	BNP Paribas Exane
10/8/2025	$700.00	Hold → Buy	Deutsche Bank
7/8/2025	$542.00	Buy → Hold	Deutsche Bank
4/11/2025	$521.00	Sell → Neutral	Goldman

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