NORTHROP GRUMMAN CORP /DE/

Selected financial highlights are presented in the table below:

Sales

Third quarter 2026 sales increased $699 million, or 7 percent, driven by higher sales at all four sectors, including a 14 percent increase at Aeronautics Systems and a 12 percent increase at Defense Systems. These increases were partially offset by $95 million of higher intercompany eliminations.

Year to date 2026 sales increased $1.6 billion, or 5 percent, driven by higher sales at all four sectors, including a 14 percent increase at Aeronautics Systems. These increases were partially offset by $393 million of higher intercompany eliminations.

See “Segment Operating Results” below for further information by segment and “Product and Service Analysis” for product and service detail. See Note 10 to the financial statements for information regarding the company’s sales by customer type, contract type and geographic region for each of our segments.

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Operating Income and Margin Rate

Third quarter 2026 operating income increased $27 million, or 2 percent, primarily due to $68 million of higher segment operating income, partially offset by a $52 million decrease in the FAS/CAS operating adjustment. Operating margin rate declined to 11.4 percent from 11.9 percent principally due to the decrease in the FAS/CAS operating adjustment.

Third quarter 2026 G&A costs as a percentage of sales increased to 9.7 percent from 9.5 percent in the prior year period primarily due to an increase in our investments for future business opportunities, partially offset by higher sales.

Year to date 2026 operating income increased $114 million, or 4 percent, primarily due to $511 million of higher segment operating income largely driven by the prior year B-21 loss provision at Aeronautics Systems, partially offset by the prior year $231 million gain on the training services divestiture and a $164 million decrease in the FAS/CAS operating adjustment. Operating margin rate declined to 10.5 percent from 10.7 percent primarily due to the prior year gain on the training services divestiture and the decrease in the FAS/CAS operating adjustment, partially offset by a higher segment operating margin rate.

Year to date 2026 G&A costs as a percentage of sales decreased to 9.7 percent from 9.9 percent in the prior year period primarily due to higher sales.

See “Segment Operating Results” below for further information by segment. For information regarding product and service operating costs and expenses, see “Product and Service Analysis” below.

Federal and Foreign Income Taxes

Third quarter 2026 income tax expense decreased $49 million, or 22 percent, due to a lower ETR and $25 million of lower earnings before income taxes. The third quarter 2026 ETR decreased to 13.4 percent from 16.9 percent principally due to higher research credits.

Year to date 2026 income tax expense decreased $170 million, or 30 percent, due to a lower ETR, partially offset by $168 million of higher earnings before income taxes. The year to date 2026 ETR decreased to 11.5 percent from 17.2 percent primarily due to the remeasurement of unrecognized tax benefits during the second quarter of 2026 given recent developments with the IRS towards resolving our previously filed federal income tax returns and refund claims, as well as higher research credits, including a benefit related to CAMT guidance recently issued by the IRS.

See Note 4 to the financial statements for additional information.

Net Earnings

Third quarter 2026 net earnings increased $24 million, or 2 percent, primarily due to a $49 million decrease in income tax expense, a $31 million increase in the non-operating FAS pension benefit and a $27 million increase in operating income, partially offset by an $86 million decrease in Other, net largely driven by favorable returns on marketable securities in the prior year.

Year to date 2026 net earnings increased $338 million, or 12 percent, primarily due to a $170 million decrease in income tax expense, a $114 million increase in operating income and a $96 million increase in the non-operating FAS pension benefit, partially offset by a $51 million decrease in Other, net largely driven by lower favorable returns on marketable securities.

Diluted Earnings Per Share

Third quarter 2026 diluted earnings per share increased $0.22, or 3 percent, reflecting a 2 percent increase in net earnings and a 1 percent reduction in weighted-average diluted shares outstanding.

Year to date 2026 diluted earnings per share increased $2.60, or 14 percent, reflecting a 12 percent increase in net earnings and a 1 percent reduction in weighted-average diluted shares outstanding.

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