filings.toolsNorthrop Grumman 10-Q 2026-03-31
Filed 2026-04-21. 8 sections, 170K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
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 March 31, 2026
or
| ☐ | 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 April 16, 2026, 142,033,476 shares of common stock were outstanding.
NORTHROP GRUMMAN CORPORATION
TABLE OF CONTENTS
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NORTHROP GRUMMAN CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (Unaudited)
| Three Months Ended March 31 | |||||||||||||||||||||||
| $ in millions, except per share amounts | 2026 | 2025 | |||||||||||||||||||||
| Sales | |||||||||||||||||||||||
| Product | $ | 7,958 | $ | 7,521 | |||||||||||||||||||
| Service | 1,923 | 1,947 | |||||||||||||||||||||
| Total sales | 9,881 | 9,468 | |||||||||||||||||||||
| Operating costs and expenses | |||||||||||||||||||||||
| Product | 6,433 | 6,366 | |||||||||||||||||||||
| Service | 1,488 | 1,522 | |||||||||||||||||||||
| General and administrative expenses | 971 | 1,007 | |||||||||||||||||||||
| Total operating costs and expenses | 8,892 | 8,895 | |||||||||||||||||||||
| Operating income | 989 | 573 | |||||||||||||||||||||
| Other (expense) income | |||||||||||||||||||||||
| Interest expense | (162) | (156) | |||||||||||||||||||||
| Non-operating FAS pension benefit | 166 | 130 | |||||||||||||||||||||
| Other, net | 37 | 31 | |||||||||||||||||||||
| Earnings before income taxes | 1,030 | 578 | |||||||||||||||||||||
| Federal and foreign income tax expense | 155 | 97 | |||||||||||||||||||||
| Net earnings | $ | 875 | $ | 481 | |||||||||||||||||||
| Basic earnings per share | $ | 6.16 | $ | 3.33 | |||||||||||||||||||
| Weighted-average common shares outstanding, in millions | 142.1 | 144.6 | |||||||||||||||||||||
| Diluted earnings per share | $ | 6.14 | $ | 3.32 | |||||||||||||||||||
| Weighted-average diluted shares outstanding, in millions | 142.5 | 144.9 | |||||||||||||||||||||
| Net earnings (from above) | $ | 875 | $ | 481 | |||||||||||||||||||
| Other comprehensive (loss) income, net of tax | |||||||||||||||||||||||
| Change in cumulative translation adjustment | (2) | 2 | |||||||||||||||||||||
| Change in other, net | (3) | 8 | |||||||||||||||||||||
| Other comprehensive (loss) income, net of tax | (5) | 10 | |||||||||||||||||||||
| Comprehensive income | $ | 870 | $ | 491 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NORTHROP GRUMMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
| $ in millions, except par value | March 31, 2026 | December 31, 2025 | |||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 2,090 | $ | 4,403 | |||||||
| Accounts receivable, net | 1,806 | 1,375 | |||||||||
| Unbilled receivables, net | 7,556 | 6,544 | |||||||||
| Inventoried costs, net | 1,450 | 1,309 | |||||||||
| Prepaid expenses and other current assets | 1,868 | 1,656 | |||||||||
| Total current assets | 14,770 | 15,287 | |||||||||
| Property, plant and equipment, net of accumulated depreciation of $9,854 for 2026 and $9,648 for 2025 | 10,243 | 10,972 | |||||||||
| Operating lease right-of-use assets | 1,925 | 1,859 | |||||||||
| Goodwill | 17,439 | 17,437 | |||||||||
| Deferred tax assets | 743 | 1,051 | |||||||||
| Pension and other postretirement benefit plan assets | 3,307 | 3,167 | |||||||||
| Other non-current assets | 1,580 | 1,604 | |||||||||
| Total assets | $ | 50,007 | $ | 51,377 | |||||||
| Liabilities | |||||||||||
| Trade accounts payable | $ | 2,681 | $ | 3,240 | |||||||
| Accrued employee compensation | 1,732 | 2,309 | |||||||||
| Advance payments and billings in excess of costs incurred | 3,697 | 4,086 | |||||||||
| Other current liabilities | 4,711 | 4,247 | |||||||||
| Total current liabilities | 12,821 | 13,882 | |||||||||
| Long-term debt, net of current portion of $758 for 2026 and $534 for 2025 | 14,411 | 15,162 | |||||||||
| Pension and other postretirement benefit plan liabilities | 1,095 | 1,110 | |||||||||
| Operating lease liabilities | 1,905 | 1,857 | |||||||||
| Other non-current liabilities | 2,660 | 2,692 | |||||||||
| Total liabilities | 32,892 | 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—142,033,476 and 2025—141,997,194 | 142 | 142 | |||||||||
| Paid-in capital | 8 | — | |||||||||
| Retained earnings | 17,096 | 16,658 | |||||||||
| Accumulated other comprehensive loss | (131) | (126) | |||||||||
| Total shareholders’ equity | 17,115 | 16,674 | |||||||||
| Total liabilities and shareholders’ equity | $ | 50,007 | $ | 51,377 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NORTHROP GRUMMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31 | |||||||||||
| $ in millions | 2026 | 2025 | |||||||||
| Operating activities | |||||||||||
| Net earnings | $ | 875 | $ | 481 |
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Item 2. 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, our suppliers and partners, and our customers. We continue to work to address challenges to our business caused by the macroeconomic environment. We have seen progress in the supply chain as on-time deliveries and quality continue to improve. In remaining areas of pressure, we are proactively working with our suppliers to help meet our contract commitments.
In addition, if interest rates increase or otherwise fluctuate, it 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 recent U.S. Supreme Court decision that invalidated tariffs imposed pursuant to the International Emergency Economic Powers Act (“IEEPA”), the U.S. announced tariffs under different statutory authorities, including a 10% global tariff. 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
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to our market risks from those discussed in our 2025 Annual Report on Form 10-K.
Item 4. Controls and Procedures
DISCLOSURE CONTROLS AND PROCEDURES
Our principal executive officer (Chair, Chief Executive Officer and President) and principal financial officer (Corporate Vice President and Chief Financial Officer) have evaluated the company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934 (the Exchange Act)) as of March 31, 2026, and have concluded that these controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit is accumulated and communicated to management, including the principal executive officer and the principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the three months ended March 31, 2026, no changes occurred in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We have provided information about certain legal proceedings in which we are involved in Notes 6 and 7 to the financial statements.
We are a party to various investigations, lawsuits, arbitration, claims, enforcement actions and other legal proceedings, including government investigations and claims, that arise in the ordinary course of our business. These types of matters could result in administrative, civil or criminal fines, penalties or other sanctions (which terms include judgments or convictions and consent or other voluntary decrees or agreements); compensatory, treble or other damages; non-monetary relief; or other liabilities. Government regulations provide that certain allegations against a contractor may lead to suspension or debarment from future government contracts or suspension of export privileges for the company or one or more of its components. The nature of legal proceedings is such that we cannot assure the outcome of any particular matter. For additional information on pending matters, please see Notes 6 and 7 to the financial statements, and for further information on the risks we face from existing and future investigations, lawsuits, arbitration, claims, enforcement actions and other legal proceedings, please see “Risk Factors” in our 2025 Annual Report on Form 10-K.
Consistent with SEC Regulation S-K Item 103, we have elected to disclose those environmental proceedings with a governmental entity as a party where the company reasonably believes such proceeding would result in monetary sanctions, exclusive of interest and costs, of $1.0 million or more.
Item 1A. Risk Factors
For a discussion of our risk factors please see the section entitled “Risk Factors” in our 2025 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The table below summarizes our repurchases of common stock during the three months ended March 31, 2026.
| Period | Total Number of Shares Purchased | Average Price Paid per Share**(1)** | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs**(2)** | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs ($ in millions)****(2) | ||||||||||||||||||||||
| January 1, 2026 - January 23, 2026 | 80,801 | $ | 626.37 | 80,801 | $ | 2,484 | ||||||||||||||||||||
| January 24, 2026 - February 20, 2026 | 17,981 | 677.44 | 17,981 | 2,472 | ||||||||||||||||||||||
| February 21, 2026 - March 27, 2026 | — | — | — | 2,472 | ||||||||||||||||||||||
| Total | 98,782 | $ | 635.67 | 98,782 | $ | 2,472 |
(1)Excludes commissions paid and other costs of execution, including taxes.
(2)On December 11, 2024, the company’s board of directors authorized a new share repurchase program of up to an additional $3.0 billion in share repurchases of the company’s common stock. Repurchases under the program commenced in September 2025. All repurchases of common stock during the three months ended March 31, 2026 were made pursuant to this program. By its terms, the program will expire when the company has used all authorized funds for repurchases.
Share repurchases take place from time to time, subject to market and regulatory conditions and management’s discretion, in the open market or in privately negotiated transactions. The company retires its common stock upon repurchase and, in the periods presented, has not made any purchases of common stock other than in connection with these publicly announced repurchase programs.
See Note 2 to the financial statements for further information on our share repurchase programs.
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Item 5. Other Information
Consistent with Item 408 of Regulation S-K, the following table reflects Rule 10b5-1 trading arrangements and non-Rule 10b5-1 trading arrangements (as defined in Item 408) entered into by any director or officer (as defined in Rule 16a-1(f) of the Exchange Act) during the quarter ended March 31, 2026.
| Name (Title) | Type of Trading Arrangement | Date of Adoption | Expiration Date of Trading Arrangement | Aggregate Number of Securities to Be Purchased or Sold | ||||||||||
| Kathy J. Warden | Rule 10b5-1 Trading Arrangement | February 13, 2026 | January 29, 2027 or such earlier date upon the completion of all trades under the plan or the occurrence of such other termination events as specified in the plan. | Sale of 25,000 shares of common stock | ||||||||||
| (Chair, Chief Executive Officer and President) | ||||||||||||||
| Michael A. Hardesty | Rule 10b5-1 Trading Arrangement | February 20, 2026 | March 12, 2027 or such earlier date upon the completion of all trades under the plan or the occurrence of such other termination events as specified in the plan. | Sale of 1,036 shares of common stock Sale of shares to be received upon payout of 2024 RSRs and RPSRs(1) | ||||||||||
| (Corporate Vice President, Controller, and Chief Accounting Officer) | ||||||||||||||
| Thomas H. Jones | Rule 10b5-1 Trading Arrangement | February 25, 2026 | February 5, 2027 or such earlier date upon the completion of all trades under the plan or the occurrence of such other termination events as specified in the plan. | Gift of 526 shares Sale of shares received upon payout of 2023 RSRs and RPSRs | ||||||||||
| (Corporate Vice President and President, Aeronautics Systems Sector) |
(1) The aggregate number of shares to be sold will depend, in part, on future company performance.
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Item 6. Exhibits
| + | Management contract or compensatory plan or arrangement | ||||
| * | Filed with this report | ||||
| ** | Furnished with this report | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NORTHROP GRUMMAN CORPORATION (Registrant) | ||||||||
| By: | /s/ Michael A. Hardesty | |||||||
| Michael A. Hardesty Corporate Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) |
Date: April 20, 2026
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