Northrop Grumman Corp. (NOC)

Northrop Grumman reported third-quarter 2026 sales of $11.1 billion on 20 October, up 7 percent, with net earnings of $1.1 billion 1. New orders of $16.4 billion came in at 1.5 times sales, lifting backlog, the work under contract still to be done, to a record $109.6 billion 112.

A bomber and a missile drove the quarter 1. Aeronautics Systems sales rose 14 percent on F-35 work, the B-21 and B-2 support, and Defense Systems sales rose 12 percent as the Sentinel missile program ramped up 1. The company raised its 2026 guidance, and chief executive Kathy Warden pointed to growth "as reflected in our 2027 outlook" 1.

The open questions sit in Washington 214. Congress has funded the Department of War only through 11 December 2026, under a continuing resolution that holds spending at the prior year's levels 2. On 29 September the Navy chose Boeing over Northrop for the F/A-XX carrier fighter, a development award of more than $20 billion, and Breaking Defense reported Northrop was likely to weigh a protest 14.

The company began in 1939 in Hawthorne, California, as Northrop Aircraft, and became known for flying-wing designs such as the B-2 Spirit stealth bomber 3. It took its present name after buying Grumman in 1994, then added Westinghouse's defense electronics in 1996, and Litton, Newport News Shipbuilding and TRW in 2001 and 2002 3.

In 2011 it spun off its shipyards as Huntington Ingalls Industries, and kept its aircraft, electronics and space work 3. The shipyards had come with Litton and Newport News, so the spin-off undid the shipbuilding part of those deals 3.

The next big step came on 6 June 2018, when it bought Orbital ATK, a maker of rockets, satellites and missile parts, for $7.7 billion in cash 5. Sales rose 16 percent that year, with $3.3 billion coming from the new business, renamed Innovation Systems 5.

It then narrowed toward hardware 6. In January 2021 it sold its IT and mission support services business to Veritas Capital for $3.4 billion in cash, booking a $2.0 billion pre-tax gain 6.

The sale cut 2021 sales by $2.2 billion, so total sales fell 3 percent even as the businesses it kept grew 3 percent 6. The gain, with a mark-to-market pension gain from revaluing its pension plans, lifted 2021 net earnings to $7.0 billion from $3.2 billion 6.

The B-21 Raider then became both its growth engine and its sore spot 27. The Air Force awarded it in 2015, with development plus five early production lots for 21 aircraft, and those lots are largely fixed price, so cost overruns fall on the company 2.

In 2023 sales rose 7 percent, but operating income fell 30 percent on a $1.56 billion charge on those lots, driven by higher supplier and factory costs 7. Net earnings fell to $2.1 billion from $4.9 billion 7.

Sales grew 4 percent in 2024, led by a 12 percent rise at Aeronautics Systems, while the wind-down of a classified space program and the NGI program cut Space Systems sales by $595 million 8. In 2025 sales rose 2 percent to $42.0 billion, as Mission Systems grew 10 percent on classified airborne radar work and Space Systems fell 8 percent 3.

The bomber cost money again in 2025: a $477 million loss provision in the first quarter cut the Aeronautics margin to 6.3 percent 3. In May 2025 the company sold its training services business for $333 million in cash 3. Net earnings held at $4.2 billion 3.

Aeronautics Systems: bombers, jet parts and drones

Aeronautics Systems designs, builds and maintains military aircraft for the Air Force, the Navy and allies, and was the largest sector in 2025 with $13.0 billion of sales 3. Its main programs are the B-21 Raider bomber, upkeep of the B-2, fuselage work for the F-35, the E-2D Hawkeye radar plane, and the MQ-4C Triton and RQ-4 Global Hawk surveillance drones 3. About 40 percent of the sector's work is classified, which the company calls restricted 3.

Its third-quarter sales rose 14 percent to $3.6 billion, and its margin, operating income as a share of sales, rose to 10.5 percent 1. The B-21 has cost the company about $2.0 billion of losses on its early production lots 2. In early 2026 it agreed with the Air Force to raise the bomber's production rate, and it expects to invest about $2.5 billion in added capacity for the chance of better returns 2.

Defense Systems: Sentinel, weapons and ammunition

Defense Systems builds strategic missiles, tactical weapons, rocket motors, ammunition and IBCS, a command system that links air-defense sensors and launchers for the U.S. Army and Poland 3. Its centerpiece is Sentinel, the new intercontinental ballistic missile, whose development contract was worth $13.3 billion when awarded in 2020 2.

Rising cost estimates for later phases set off a Nunn-McCurdy breach review in January 2024, a legal test for programs far over budget 2. The Pentagon kept the program in July 2024 but ordered it restructured, and joint work on the new plan has added $9.4 billion to its backlog 2.

Other lines include rocket parts for GMLRS, the AARGM radar-hunting missile, 30mm and 120mm ammunition, and cannons that shoot down drones 3. Third-quarter sales rose 12 percent to $2.3 billion 1.

Mission Systems: radars, electronics and submarines

Mission Systems makes radars, infrared sensors, electronic warfare gear, networks, navigation sensors, microelectronics and submarine power and propulsion 3. Examples are the F-35's fire-control radar and its Distributed Aperture System, the SABR radar for F-16s, and power and propulsion for Virginia and Columbia class submarines 3.

Its 2025 sales rose 10 percent to $12.5 billion, mostly on classified airborne radar programs, at a margin of 14.6 percent 3. The company also runs three government-accredited chip plants, in Linthicum, Maryland, Apopka, Florida, and Redondo Beach, California 16.

Space Systems: satellites, rockets and interceptors

Space Systems builds satellites, missile-defense interceptors, solid rocket motors and the Cygnus cargo craft that resupplies the International Space Station for NASA 3. Its boosters include the GEM 63 and GEM 63XL used on Atlas V and Vulcan rockets 3. About 45 percent of its work is classified 3.

Sales fell 8 percent in 2025 to $10.8 billion as a classified space program and the NGI program wound down 3. Reuters reported in July that the cost to finish the GEM 63XL motor rose after a launch anomaly earlier in the year 13.

Customers and what it sells

The U.S. government bought 84 percent of what the company sold in 2025 3. Products made up about 80 percent (computed) of 2025 sales and services the rest, because most of the work is building hardware under long contracts 3.

Plants and people

At the end of 2025 the company used about 53 million square feet at 446 locations, mostly in the U.S., and had about 95,000 employees 3. It hired about 7,500 people in 2025, and about 4,300 workers are covered by 15 union agreements 3. Space Systems has the largest footprint, 18.4 million square feet, at sites from Redondo Beach, California, to Magna, Utah 3.

Kathy Warden has been chair, chief executive and president since 2019, and John Greene, formerly finance chief of Discover Financial Services, became chief financial officer in 2026 3. In February 2026 the board added Admiral Christopher Grady, a former vice chairman of the Joint Chiefs of Staff, and grew to 13 seats 11.

Rivals

The company names Boeing, General Dynamics, L3Harris, Lockheed Martin and RTX as its main competitors, along with a growing number of startups 3. Rivals are often partners too: it builds parts of the F-35, a Lockheed Martin program, while competing with Lockheed elsewhere 314.

The sharpest recent loss came in fighters: Boeing won the Navy's F/A-XX in September, after Northrop had chosen not to pursue what became the Air Force's F-47 14. Analysts quoted by Breaking Defense said the company's bomber and missile programs leave it a buffer 14.

Problems on file

The fixed-price bomber lots remain the main financial risk, and the company warns that a change in its cost estimates could materially affect its results 2. It faces individual lawsuits and a proposed class action in federal court in New York over pollution from former Navy and Grumman plants in Bethpage 3. The Justice Department has sought information since December 2022 about the interest rate the company used to set pension costs it charges the government 3.

The umbrella, in words

Northrop Grumman Corporation is the parent, and its annual report names two significant subsidiaries, Northrop Grumman Systems Corporation and Northrop Grumman Overseas Holdings, both wholly owned 4. The exhibit says the company has other subsidiaries that are not significant, so the list is not complete 4. The former Orbital ATK became a wholly owned subsidiary named Northrop Grumman Innovation Systems in 2018 5.

It sells under its own name through four sectors: Aeronautics, Defense, Mission and Space Systems 3. In the second quarter of 2026 it sold an investment in a public company for $107 million, at a $35 million gain 2. At the end of 2025 it owned about 23.0 million square feet of floor space, leased 23.4 million and used 6.3 million owned or leased by the government 3.

No single holder controls the company: its 2026 proxy lists State Street at 9.8 percent, Vanguard at 9.3 percent, Capital International Investors at 8.7 percent and BlackRock at 7.5 percent 9. In May 2026 shareholders elected eleven directors and rejected a proposal for an independent board chair, 88.8 million shares against and 23.6 million for 10.

For 2026 the company guides to sales of $43.75 billion to $44.25 billion and adjusted free cash flow, cash from operations after plant spending, of $3.1 billion to $3.5 billion 1. On 20 October it raised its segment operating income range to $4.94 billion to $5.04 billion, from $4.85 billion to $5.0 billion 1.

By sector, the company expects about $14 billion of 2026 sales at Aeronautics, mid to high $8 billion at Defense, high $12 billion at Mission and about $11 billion at Space 1. It expects to turn about 35 percent of its September backlog into revenue within 12 months and 55 percent within 24 months 2.

The company expects early B-21 production lots to be awarded and built through about the end of the decade, and two further lots carry not-to-exceed terms still being negotiated 2. Reuters reported in July that the February agreement expands B-21 production capacity by 25 percent, with the first delivery set for 2027 13.

For Sentinel, the filing says the next steps are a new program baseline and a fresh Milestone B approval, the Pentagon's go-ahead for full development, with production still to be priced 2. The company says its program estimates showed no significant change in the third quarter 2.

The budget is the decision pending 2. Full-year 2027 defense funding has not passed, the stopgap runs to 11 December 2026, and the company says a lapse could bring a government shutdown 2. The administration's 2027 request seeks $1.45 trillion for defense, 44 percent above 2026's enacted level, and Congress is still weighing it 2.

On 20 October Warden told investors the company is weighing strategic alternatives for its microelectronics and quantum computing work and expects to share details in the coming months 15. It had $2.5 billion left under its share buyback authorization at 30 September and bought back no shares in the third quarter 2.