Northrop Grumman raises 2026 guidance as Q3 sales hit $11.1 billion

Northrop Grumman Corporation raised its 2026 financial guidance for key metrics after reporting third quarter sales of $11.1 billion, a 7 percent increase from the prior year period. The defense contractor, which is headquartered in Falls Church, Virginia, also disclosed a backlog that increased to $110 billion and net awards totaling $16 billion for the quarter.

In its earnings release, Northrop Grumman stated that it increased the midpoint for segment operating income by $65 million and the midpoint for MTM-adjusted earnings per share by $0.70. The company reported diluted earnings per share of $7.89 for the third quarter of 2026, up from $7.67 in the third quarter of 2025. Net earnings for the period totaled $1.1 billion, a 2 percent increase from the previous year.

Kathy Warden, chair, chief executive officer and president of Northrop Grumman, attributed the performance to continued customer demand for scalable solutions. She noted that the company is delivering with urgency and innovation, providing the capacity necessary for durable growth as it expands product offerings and scales operations. Warden expressed confidence that the record backlog, well-positioned portfolio, and industry-leading performance will drive sales and earnings growth, a trend she said is reflected in the company's 2027 outlook.

Sales growth was driven by higher performance across all four business sectors. Aeronautics Systems saw sales rise 14 percent, while Defense Systems sales increased 12 percent. Mission Systems sales grew 2 percent, and Space Systems sales rose 2 percent. These increases were partially offset by higher intercompany eliminations.

The operating margin rate for the third quarter stood at 11.4 percent, down from 11.9 percent in the same period last year. This decline was principally due to a decrease in the FAS/CAS operating adjustment. Segment operating income increased 5 percent, with the segment operating margin rate reaching 12.1 percent. The report noted that strong program performance and higher margin rates at Aeronautics Systems and Space Systems contributed to this figure, while a prior year favorable adjustment in the restricted advanced microelectronics portfolio at Mission Systems affected the comparison.

Cash flow metrics also showed improvement. Net cash provided by operating activities increased 12 percent, primarily due to improved trade working capital. Adjusted free cash flow rose 44 percent, aided by proceeds from the sale of equipment to a customer.

Key new contracts secured during the quarter included $4.6 billion for restricted programs, primarily at Aeronautics Systems, Space Systems, and Mission Systems. Additional significant awards comprised $2.0 billion for Sentinel, $1.4 billion for Virginia Class submarines, $1.3 billion for F-35 production at Aeronautics Systems, and $1.0 billion for E-2 aircraft.