What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-21 compared with 2025-10-21 · 149 added, 231 removed, 250 unchanged (60% of the section changed)

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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”, formerly referred to as the Department of Defense) and intelligence community.

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.

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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, subject to a final working capital adjustment, and recorded a pre-tax gain on sale of $231 million.

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.

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Global Security Environment

and its allies continue to face a 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 and political instability.

The market for defense products, services and solutions globally is driven by these complex and evolving security challenges, considered in the broader context of political and socioeconomic circumstances and priorities.

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 conflict in Ukraine and threats elsewhere, particularly in the Middle East and the Pacific region, have increased global tensions and instability and highlighted security requirements globally, including in Europe, the Middle East and the Pacific region, as well as the U.S.

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.

For example, we have experienced an increase in demand for certain of our products and services directly and indirectly related to the conflict in Ukraine.

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, and we are actively evaluating both opportunities and risks associated with this environment.

We believe our capabilities, particularly in space, C4ISR, missile defense, battle management, advanced weapons, strategic deterrence, and survivable aircraft and mission systems should help our customers in 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 extraordinary challenges, including inflationary pressures;

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;

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and market volatility.

These macroeconomic factors can and have contributed, and could continue to contribute, to increased costs, delays, disruptions and other performance

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

NORTHROP GRUMMAN CORPORATION

challenges, as well as increased competing demands for 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 caused by the macroeconomic environment on our business.

We have seen positive progress in the supply chain as on-time deliveries and quality continue to improve.

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, an overall increase in interest rates in recent years has raised the cost of borrowing for governments, and if rates increase or remain elevated, it could impact government spending priorities (in the U.S.

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, the widespread tariffs announced this year by the U.S.

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.

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, any reversal or temporary suspension of announced tariffs, the availability of exemptions, changes in the amount and scope of tariffs, the imposition of new tariffs and other measures that target countries may take in response to U.S.

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 in effect at this time will have a material adverse effect on our business.

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.

Political, Budget and Regulatory Environment

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In particular, it is difficult to predict the specific course of future defense budgets.

Current and future requirements related to the conflict in Ukraine, threats in the Middle East and the Pacific region and other security priorities, as well as the macroeconomic environment, the national debt, and other domestic priorities, among other things, in the U.S.

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 other things, in the U.S.

and globally, will continue to impact our customers’ budgets, spending and priorities, and our industry.

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We anticipate that issues related to budgetary priorities, defense spending levels and the debt ceiling will continue to be subjects of considerable debate, with a potentially significant impact on our programs and the company.

On March 15, 2025, the Full-Year Continuing Appropriations and Extensions Act, 2025 was enacted to continue funding the government through the remainder of FY 2025.

The full-year continuing resolution generally maintained FY 2024 funding levels, but included an increase of $6 billion in defense spending and a decrease of $13 billion in non-defense spending compared to FY 2024 funding levels.

The full-year continuing resolution provided the DoW with significant flexibility to allocate and spend funds, including authority to initiate new programs if certain requirements were met.

In the second quarter of 2025, the Presidential Administration (the “Administration”) submitted its budget request for FY 2026.

The request includes approximately $1 trillion for national security, approximately $962 billion of which is for the DoW, with $113 billion of such DoW funds included in the reconciliation bill described below.

The budget request for the DoW reflects an increase of 11.8 percent, or $101.6 billion, above FY 2025 enacted levels.

Congress is evaluating the Administration’s budget request as it drafts authorization and appropriations legislation for FY 2026.

On July 4, 2025, the FY 2025 reconciliation bill titled the One Big Beautiful Bill Act was enacted.

The OBBBA allocates approximately $150 billion in funds for defense spending, including funding for air and missile defense, munitions, shipbuilding and supply chains and other military capabilities, and the appropriated funds will remain available to be obligated until September 30, 2029 and expended through FY 2034.

On July 4, 2025, the FY 2025 reconciliation bill titled the One Big Beautiful Bill Act (the “OBBBA”) was enacted.

The OBBBA allocates approximately $150 billion in mandatory defense funding, including funding for air and missile defense, munitions, strategic deterrence, shipbuilding and supply chains and other military capabilities, and the appropriated funds will remain available to be obligated until September 30, 2029 and expended through FY 2034.

The OBBBA is expected to result in increased investments by the DoW in defense modernization projects and Pacific region deterrence, among other programs.

See Note 4 to the financial statements for additional information on key income tax provisions of the OBBBA.

Appropriations for FY 2026 were not enacted by September 30, 2025, and on October 1, 2025, the U.S.

Government entered a shutdown, which is ongoing.

Consistent with federal guidelines, we are continuing to perform work on existing contracts funded with appropriations from prior fiscal years.

In addition, we may be expected to continue to perform for some period of time on certain of our U.S.

Government contracts even if the U.S.

Government is unable to make timely payments, for example if funding from prior year appropriations has been exhausted and appropriations legislation or a continuing resolution for FY 2026 has not been enacted.

If a prolonged government shutdown occurs, it could result in program disruptions, limit the U.S.

Government’s ability to progress programs and make timely payments and impact new program starts.

A prolonged shutdown could have significant

NORTHROP GRUMMAN CORPORATION

consequences for our company, our employees, our suppliers and our industry and could result in delayed cash collections and/or have a material adverse effect on our financial position, results of operations and/or cash flows.

The Administration has issued numerous executive orders, including orders that direct executive departments and agencies to put in place a regulatory freeze on pending rules, to effectuate the repeal of any regulation that an agency determines is unlawful, to undertake a comprehensive overhaul of the Federal Acquisition Regulation and to reform the DoW defense acquisition process.

On February 3, 2026, annual appropriations to fund a vast majority of the federal government for FY 2026 were enacted.

The legislation finalized 11 of the 12 regular appropriations bills for FY 2026 and includes approximately $859 billion for defense.

The legislation did not fund the Department of Homeland Security (“DHS”), which was instead funded under a continuing resolution through February 13, 2026.

After the DHS continuing resolution expired, the federal government entered a partial shutdown, which remains in effect.

We do not believe that the ongoing partial shutdown will have a material adverse effect on our business.

The Presidential Administration (the “Administration”) has issued numerous executive orders, including orders to undertake a comprehensive overhaul of the Federal Acquisition Regulation, to reform the DoW defense acquisition process and, more recently, to address underperformance and insufficient prioritization of government contracts, insufficient investment in production and production speed and incentive compensation metrics applicable to defense contractors.

See “Risk factors” for further discussion regarding risks associated with executive orders and regulatory changes.

Some of the Administration’s executive orders are subject to ongoing court challenges.

Implementation of certain of these executive orders could adversely affect our business or create a more challenging or costly regulatory, operating and economic environment.

For example, on April 9, 2025, the President signed an executive order entitled Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base.

The executive order directs the Secretary of War to submit a plan for expediting DoW acquisitions that relies on existing authorities.

According to the executive order, the plan, among other things, should include a first preference for commercial solutions and a general preference for Other Transaction Authority procurements.

In addition, the executive order directs the DoW to review all major defense acquisition programs (MDAP).

Any program that is more than 15% behind schedule or over cost based on the current Acquisition Program Baseline, unable to meet key performance parameters, or unaligned with the Secretary of War’s mission priorities will be considered for potential cancellation.

Implementation of this executive order, including changes in DoW priorities or regulations and results of the MDAP review, could lead to contract cancellations, disruptions and/or stop work orders, which could have a material adverse effect on our financial position, results of operations and/or cash flows.

In light of the ongoing conflicts and heightened global instability as well as political tensions and related legal challenges, we expect continued uncertainty in the global security, U.S.

political, budget and regulatory environment.

Initiatives to reduce governmental spending, federal budget and debt ceiling action, and further changes in U.S.

government policy positions, including trade policy, tax policy and DoW policies or priorities, could materially impact defense spending broadly and the company’s programs in particular.

Initiatives to reduce governmental spending, federal budget and debt ceiling action, and further

NORTHROP GRUMMAN CORPORATION

changes in U.S.

government policy positions, including trade and foreign policy, tax policy and DoW policies or priorities, could materially impact defense spending broadly and the company’s programs in particular.

In 2015, the U.S.

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The LRIP options are largely fixed price and are expected to continue to be awarded and executed through approximately the end of the decade.

In addition to the five LRIP options, Northrop Grumman and the U.S.

Air Force have established not to exceed (NTE) pricing for additional aircraft up to unit 40.

The average NTE value for these subsequent lots is above the average unit price of the five LRIP lots, and the NTE lots include an economic price adjustment clause to help protect against certain inflationary pressures.

Final terms, quantity, and pricing for these subsequent lots are not fully negotiated.

We are in discussions with the U.S.

Air Force regarding the potential for an accelerated production rate on the program.

While the ultimate outcome of these discussions remains uncertain, we currently expect any agreement to accelerate production rate would require future investment by the company to expand production capacity along with the opportunity to earn improved returns on the LRIP and NTE phases of the program.

Northrop Grumman and the U.S.

Air Force have also established not to exceed (NTE) pricing for two additional lots.

The average value for these NTE lots is above the average unit price of the five LRIP lots, and the NTE lots include an economic price adjustment clause to help protect against certain inflationary pressures.

Final terms, quantity, and pricing for the NTE lots are not fully negotiated.

During the first quarter of 2026, we reached an agreement with the U.S.

Air Force to expand production capacity for the B-21 program and increase the aircraft production rate.

We currently expect to invest approximately $2.5 billion over a multi-year period to expand production capacity;

in return, we have the opportunity to earn improved returns on the LRIP and NTE phases of the program.

During the fourth quarter of 2023, we recognized a projected loss of $1.56 billion across the five LRIP options.

During the first quarter of 2025, we recognized an additional $477 million loss across the five LRIP options.

During the third quarter of 2025, we again reviewed our estimated profitability on the LRIP phase of the program and made no significant changes to the previously recognized loss.

However, we experienced higher-than-expected costs to produce the EMD flight test aircraft, which increased our estimate to manufacture the LRIP units;

this cost increase was largely offset by a reduction in our expected loss on the remaining LRIP lots due to a contract restructure that occurred during the third quarter of 2025.

The company’s third quarter 2025 results reflect our current best estimate of cost to complete the LRIP and NTE aircraft, as well as the outcome of ongoing discussions with our suppliers.

If our estimated cost to complete the aircraft changes, if we reach an agreement with the customer regarding an accelerated production rate, or if our assumptions regarding contract performance, quantities, supplier negotiations, or funding to mitigate the impact of macroeconomic disruptions are resolved more or less favorably than what we have estimated, our financial position, results of operations and/or cash flows could be materially affected.

During the first quarter of 2026, we again reviewed our estimated profitability on the LRIP phase of the program and made no significant changes to the previously recognized loss.

However, impacts from the recent agreement with the U.S.

Air Force and higher estimated production costs resulted in a $157 million net unfavorable EAC adjustment on the first four LRIP lots, which was offset by a net reduction in the loss contingency accrual on the remainder of the program.

The company’s first quarter 2026 results reflect our current best estimate of cost to complete the LRIP and NTE aircraft, as well as the outcome of ongoing discussions with our suppliers.

If our estimated cost to complete the aircraft changes, or if our assumptions regarding contract performance, quantities, or supplier negotiations are resolved more or less favorably than what we have estimated, our financial position, results of operations and/or cash flows could be materially affected.

Sentinel Program

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In January 2024, the U.S.

Air Force provided congressional notification that the Sentinel program was under a Nunn-McCurdy breach review, which is required when total program cost estimates exceed certain defined

NORTHROP GRUMMAN CORPORATION

Air Force provided congressional notification that the Sentinel program was under a Nunn-McCurdy breach review, which is required when total program cost estimates exceed certain defined thresholds.

This notification, which had been driven primarily by increases in cost estimates for the Production and Deployment phases, commenced the process to achieve certification for continuance of the program and update its baseline cost estimates.

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The program restructure will include a revision to the acquisition strategy, joint establishment of a new program baseline, and other critical preparation activities necessary to re-accomplish Milestone B approval.

Based on this preliminary execution framework, we updated our estimated profitability on the program and recognized a $76 million favorable EAC adjustment during the second quarter of 2025 largely related to our expectations for achieving certain contract incentives.

During the third quarter of 2025, we reviewed our estimated profitability on the Sentinel program and made no significant changes.

During the first quarter of 2026, we reviewed our estimated profitability on the Sentinel program and made no significant changes.

If our estimated cost to complete the restructured EMD effort or our expectations for achieving contract incentives are more or less favorable than what we have estimated, our financial position, results of operations and/or cash flows could be materially affected.

NORTHROP GRUMMAN CORPORATION

Operating Performance Assessment and Reporting

In evaluating our operating performance, we primarily focus on changes in sales and operating margin rates.

Where applicable, significant fluctuations in operating performance attributable to individual contracts or programs, or changes in a specific cost element across multiple contracts, are described in our analysis.

Based on this approach and the nature of our operations, the discussion of results of operations below first focuses on our four segments before distinguishing between products and services.

Changes in sales are generally described in terms of volume, while changes in operating margin rates are generally described in terms of performance and/or contract mix.

For purposes of this discussion, volume generally refers to increases or decreases in sales or cost from production/service activity levels and performance generally refers to non-volume-related changes in profitability, which are typically described in terms of changes in net EAC adjustments.

Contract mix generally refers to changes in the ratio of contract type and/or life cycle (e.g., cost-type, fixed-price, development, production, and/or sustainment).

Contract mix can also refer to differences in the profitability of the programs that drive changes in sales (e.g., sales growth or decreases on programs with accretive or dilutive margin rates).

CONSOLIDATED OPERATING RESULTS

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Selected financial highlights are presented in the table below:

Three Months Ended September 30 % Nine Months Ended September 30 %

$ in millions, except per share amounts 2025 2024 Change 2025 2024 Change

Three Months Ended March 31 %

$ in millions, except per share amounts 2026 2025 Change

Sales $ 9,881 $ 9,468 4 %

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Operating costs and expenses as a % of sales 90.0 % 93.9 %

Gain on sale of business — — NM 231 — NM

Operating income 989 573 73 %

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The table below reconciles sales to organic sales:

Three Months Ended September 30 % Nine Months Ended September 30 %

Three Months Ended March 31 %

$ in millions

2025 2024 Change 2025 2024 Change

2026 2025 Change

Sales $ 9,881 $ 9,468 4 %

Training services sales

— (70) (112) (226)

Organic sales

$ 9,881 $ 9,396 5 %

Current Quarter

Third quarter 2025 sales increased $427 million, or 4 percent, primarily driven by higher sales at Mission Systems, Defense Systems and Aeronautics Systems, partially offset by lower sales at Space Systems due, in part, to the wind-down of work on certain Space programs, as discussed in our segment operating results below.

Year to date 2025 sales were comparable with the prior year period and reflect higher sales at Mission Systems and Defense Systems, partially offset by lower sales at Space Systems due, in part, to the wind-down of work on certain Space programs.

First quarter 2026 sales increased $413 million, or 4 percent, due to higher sales of $469 million at Aeronautics Systems, as well as higher sales at Defense Systems and Mission Systems.

These increases were partially offset by $116 million of higher intercompany eliminations and lower sales at Space Systems due to the wind-down of work on the Next Generation Interceptor (NGI) program.

See “Segment Operating Results” below for further information by segment and “Product and Service Analysis” for product and service detail.

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Operating Income and Margin Rate

Current Quarter

Third quarter 2025 operating income increased $122 million, or 11 percent, primarily due to a $131 million increase in segment operating income.

Operating margin rate increased to 11.9 percent from 11.2 percent principally due to a higher segment operating margin rate.

Third quarter 2025 general and administrative (G&A) costs as a percentage of sales decreased to 9.5 percent from 9.9 percent in the prior year period primarily due to higher sales.

Year to date 2025 operating income decreased $41 million, or 1 percent, due to a $287 million decrease in segment operating income, primarily driven by a $477 million loss provision recorded on the B-21 program at Aeronautics Systems in the first quarter of 2025, and a $128 million increase in non-divestiture-related unallocated corporate expense.

These decreases were partially offset by higher operating income due to a $231 million pre-tax gain on sale for the training services divestiture and a $161 million increase in the FAS/CAS operating adjustment.

Operating margin rate declined to 10.7 percent from 10.8 percent reflecting the items above.

Year to date 2025 G&A costs as a percentage of sales decreased to 9.9 percent from 10.4 percent in the prior year period primarily due to cost management.

First quarter 2026 operating income increased $416 million, or 73 percent, largely driven by the prior year $477 million B-21 loss provision at Aeronautics Systems, partially offset by a $56 million decrease in the FAS/CAS operating adjustment.

Operating margin rate increased to 10.0 percent from 6.1 percent reflecting the items above.

First quarter 2026 G&A costs as a percentage of sales decreased to 9.8 percent from 10.6 percent in the prior year period primarily due to higher sales and cost management.

See “Segment Operating Results” below for further information by segment.

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Federal and Foreign Income Taxes

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted.

Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of research and development expenditures under IRC Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes.

The company recognized the income tax effects of the OBBBA in its third quarter 2025 financial statements.

Current Quarter

Third quarter 2025 income tax expense increased $61 million, or 38 percent, due to a higher ETR and higher earnings before income taxes.

The third quarter 2025 ETR increased to 16.9 percent from 13.6 percent primarily due to the prior year ETR reflecting a net reduction in tax reserves largely due to a federal court decision in 2024 as well as a reduction in research credits in the current year due to enactment of the OBBBA, partially offset by lower interest expense on unrecognized tax benefits.

NORTHROP GRUMMAN CORPORATION

Year to date 2025 income tax expense increased $18 million, or 3 percent, due to a higher ETR, which more than offset lower earnings before income taxes.

The year to date 2025 ETR increased to 17.2 percent from 16.0 percent primarily due to the prior year ETR reflecting a net reduction in tax reserves largely due to a federal court decision in 2024 as well as additional income tax expense in the current year related to nondeductible goodwill in the divested training services business, partially offset by lower interest expense on unrecognized tax benefits.

First quarter 2026 income tax expense increased $58 million, or 60 percent, due to $452 million of higher earnings before income taxes, partially offset by a lower effective tax rate (ETR).

The first quarter 2026 ETR decreased to 15.0 percent from 16.8 percent primarily due to 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.

Current Quarter

Third quarter 2025 net earnings increased $74 million, or 7 percent, primarily due to the $122 million increase in operating income described above as well as a $62 million increase in returns on marketable securities, partially offset by a $61 million increase in income tax expense and a $32 million reduction in the non-operating FAS pension benefit.

Year to date 2025 net earnings decreased $155 million, or 5 percent, primarily due to a $100 million reduction in the non-operating FAS pension benefit, lower interest income on short-term investments, and the $41 million decrease in operating income described above, partially offset by a $78 million increase in returns on marketable securities.

First quarter 2026 net earnings increased $394 million, or 82 percent, primarily due to the $416 million increase in operating income described above and a $36 million increase in the non-operating FAS pension benefit, partially offset by a $58 million increase in income tax expense.

Diluted Earnings Per Share

Current Quarter

Third quarter 2025 diluted earnings per share increased 10 percent, reflecting a 7 percent increase in net earnings and a 2 percent reduction in weighted-average diluted shares outstanding.

Year to date 2025 diluted earnings per share decreased 3 percent, reflecting a 5 percent decrease in net earnings and a 3 percent reduction in weighted-average diluted shares outstanding.

First quarter 2026 diluted earnings per share increased $2.82, or 85 percent, reflecting an 82 percent increase in net earnings and a 2 percent reduction in weighted-average diluted shares outstanding.

NORTHROP GRUMMAN CORPORATION

SEGMENT OPERATING RESULTS

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Aeronautics Systems, Defense Systems, Mission Systems and Space Systems.

Effective July 1, 2024, the company realigned the SDS division, which includes the Sentinel program, from Space Systems to Defense Systems.

Effective January 1, 2025, the company realigned the SSAS business unit from Defense Systems to Aeronautics Systems.

These realignments are reflected in the financial information contained in this report.

Operating Performance Assessment and Reporting

This section discusses segment sales, operating income and operating margin rates.

In evaluating segment operating performance, we look primarily at changes in sales and operating income.

Based on this approach and the nature of our operations, the discussion of results of operations below first focuses on our four segments before distinguishing between products and services.

Changes in sales are generally described in terms of volume, while changes in margin rates are generally described in terms of performance and/or contract mix.

Contract mix generally refers to changes in the ratio of contract type and/or lifecycle (e.g., cost-type, fixed-price, development, production, and/or sustainment).

NORTHROP GRUMMAN CORPORATION

Segment Operating Income and Margin Rate

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These measures may not be defined and calculated by other companies in the same manner and should not be considered in isolation or as alternatives to operating results presented in accordance with GAAP.

Three Months Ended September 30 % Nine Months Ended September 30 %

$ in millions 2025 2024 Change 2025 2024 Change

Three Months Ended March 31 %

$ in millions 2026 2025 Change

Operating income $ 989 $ 573 73 %

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FAS/CAS operating adjustment (7) (63) (89) %

Gain on sale of business

— — NM (231) — NM

Training services divestiture - unallowable state taxes and transaction costs — 2 NM 20 2 NM

Intangible asset amortization and PP&E step-up depreciation 21 21 — %

Other unallocated corporate expense

81 21 286 % 165 28 489 %

Unallocated corporate expense

102 46 122 % 17 102 (83) %

Segment operating income $ 1,072 $ 568 89 %

Segment operating margin rate 10.8 % 6.0 %

Current Quarter

Third quarter 2025 segment operating income increased $131 million, or 11 percent, primarily due to higher operating income at Mission Systems and Defense Systems, partially offset by lower operating income at Space Systems.

Segment operating margin rate increased to 12.3 percent from 11.5 percent due to higher operating margin rates at Mission Systems and Defense Systems, partially offset by lower operating margin rates at Space Systems and Aeronautics Systems.

Year to date 2025 segment operating income decreased $287 million, or 9 percent, due to lower operating income at Aeronautics Systems, primarily driven by a $477 million B-21 loss provision in the first quarter of 2025, and lower operating income at Space Systems, partially offset by higher operating income at Mission Systems and Defense Systems.

Segment operating margin rate decreased to 10.1 percent from 11.0 percent primarily due to the B-21 loss provision, partially offset by higher operating margin rates at Defense Systems and Mission Systems.

First quarter 2026 segment operating income increased $504 million, or 89 percent, primarily due to $488 million of higher operating income at Aeronautics Systems and $72 million of higher operating income at Mission Systems, partially offset by $48 million of lower operating income at Space Systems.

Segment operating margin rate increased to 10.8 percent from 6.0 percent primarily due to a higher operating margin rate at Aeronautics Systems and Mission Systems, partially offset by a lower operating margin rate at Space Systems.

FAS/CAS Operating Adjustment

The third quarter 2025 and year to date 2025 FAS/CAS operating adjustment reflects higher CAS pension expense largely driven by plan asset returns in prior years and changes in certain CAS actuarial assumptions as of December 31, 2024.

The first quarter 2026 FAS/CAS operating adjustment reflects lower CAS pension expense largely driven by favorable plan asset returns in prior years.

Unallocated Corporate Expense

Current Quarter

The change in third quarter 2025 unallocated corporate expense is primarily due to higher deferred state tax expense largely related to the repeal of mandatory capitalization of research and development expenditures under IRC Section 174 upon enactment of the OBBBA.

NORTHROP GRUMMAN CORPORATION

The change in year to date 2025 unallocated corporate expense is primarily due to a $231 million gain on the sale of our training services business, partially offset by an $18 million increase in unallowable state taxes and transaction costs associated with the divestiture.

Non-divestiture-related unallocated corporate expense increased primarily due to higher deferred state tax expense largely related to the repeal of mandatory capitalization of research and development expenditures under IRC Section 174, as well as the prior year including a $26 million increase in our estimated recovery of certain environmental remediation costs.

The increase in first quarter 2026 unallocated corporate expense is primarily due to the resolution of a litigation matter as well as higher deferred state tax expense largely related to the repeal of mandatory capitalization of research and development expenditures under IRC Section 174.

Net EAC Adjustments - We record changes in estimated contract earnings at completion (net EAC adjustments) using the cumulative catch-up method of accounting.

Net EAC adjustments can have a significant effect on segment operating income and margin rate.

NORTHROP GRUMMAN CORPORATION

The aggregate favorable and unfavorable EAC adjustments are presented in the table below:

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

$ in millions 2026 2025

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Net EAC adjustments by segment are presented in the table below:

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

$ in millions 2026 2025

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AERONAUTICS SYSTEMS

Three Months Ended September 30 % Nine Months Ended September 30 %

$ in millions 2025 2024 Change 2025 2024 Change

Three Months Ended March 31 %

$ in millions 2026 2025 Change

Sales $ 3,283 $ 2,814 17 %

Operating income

305 309 (1) % 443 927 (52) %

Operating income (loss)

Operating margin rate 9.3 % (6.5) %

Current Quarter

Third quarter 2025 sales increased $181 million, or 6 percent, primarily due to a $110 million increase on the E-130J TACAMO (“TACAMO”) program as it ramps up and a $105 million increase on the F-35 program largely driven by materials volume, partially offset by a decrease on F/A-18 as production nears completion.

Year to date 2025 sales were comparable to the prior year period and reflect a $226 million increase on TACAMO as that program ramps and a $111 million increase on the F-35 program largely driven by materials volume, partially offset by lower sales on restricted programs, commercial aerostructures programs and on F/A-18 as production nears completion.

First quarter 2026 sales increased $469 million, or 17 percent, primarily due to higher sales on B-21 and other restricted programs as well as increased volume on the E-130J TACAMO program as it ramps up.

The higher B-21 sales reflect the company’s first quarter 2026 agreement with the U.S.

Air Force to expand production capacity and increase the aircraft production rate, including the sale of a company-owned test asset.

The sales increases were partially offset by a decrease on F/A-18 as final production deliveries have completed.

Operating Income

Current Quarter

Third quarter 2025 operating income decreased $4 million, or 1 percent, due to a lower operating margin rate, partially offset by higher sales.

Operating margin rate decreased to 9.7 percent from 10.4 percent, primarily due to lower net contract margin adjustments.

NORTHROP GRUMMAN CORPORATION

Year to date 2025 operating income decreased $484 million and operating margin rate decreased to 4.9 percent primarily due to the previously described $477 million loss provision recorded on the LRIP phase of the B-21 program in the first quarter of 2025.

First quarter 2026 operating income increased $488 million and operating margin rate increased to 9.3 percent primarily due to the absence of the prior year B-21 loss provision.

DEFENSE SYSTEMS

Three Months Ended September 30 % Nine Months Ended September 30 %

$ in millions 2025 2024 Change 2025 2024 Change

Three Months Ended March 31 %

$ in millions 2026 2025 Change

Sales $ 1,899 $ 1,805 5 %

Training services sales

— (70) (112) (226)

Organic sales

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Operating margin rate 9.7 % 9.9 %

Current Quarter

Third quarter 2025 sales increased $259 million, or 14 percent, primarily due to higher volume on armament programs, including military ammunition programs, increased volume from new awards across the Integrated Battle Command System (IBCS) program portfolio and higher sales on Sentinel.

These increases were partially offset by a $70 million reduction in sales related to the training services divestiture.

Year to date 2025 sales increased $459 million, or 9 percent, primarily due to a $195 million increase in sales on Sentinel, higher volume on armament programs, including a $135 million increase on military ammunition programs, and increased volume from new awards across the IBCS program portfolio.

These increases were partially offset by a $114 million reduction in sales related to the training services divestiture.

First quarter 2026 sales increased $94 million, or 5 percent, primarily due to higher volume on Sentinel as that program continues to ramp, as well as higher volume on tactical solid rocket motor programs and across the Integrated Battle Command System (IBCS) portfolio.

These increases were partially offset by a $72 million reduction in sales related to the divested training services business.

NORTHROP GRUMMAN CORPORATION

Operating Income

Current Quarter

Third quarter 2025 operating income increased $74 million, or 46 percent, primarily due to a higher operating margin rate and higher sales.

Operating margin rate increased to 11.4 percent from 8.9 percent principally due to higher net EAC adjustments and changes in mix toward more fixed-price contracts.

Year to date 2025 operating income increased $159 million, or 31 percent, primarily due to a higher operating margin rate and higher sales.

Operating margin rate increased to 11.4 percent from 9.4 percent principally due to higher net EAC adjustments, including a $76 million favorable EAC adjustment on the Sentinel program during the second quarter of 2025.

First quarter 2026 operating income increased $5 million, or 3 percent, primarily due to higher sales, partially offset by a lower operating margin rate.

Operating margin rate decreased to 9.7 percent from 9.9 percent principally due to lower net EAC adjustments.

MISSION SYSTEMS

Three Months Ended September 30 % Nine Months Ended September 30 %

$ in millions 2025 2024 Change 2025 2024 Change

Three Months Ended March 31 %

$ in millions 2026 2025 Change

Sales $ 2,861 $ 2,807 2 %

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Operating margin rate 15.1 % 12.9 %

Current Quarter

Third quarter 2025 sales increased $270 million, or 10 percent, primarily due to higher sales on restricted advanced microelectronics programs, higher volume on marine systems programs and ramp-up on international ground-based radar programs.

Year to date 2025 sales increased $802 million, or 10 percent, primarily due to the timing of materials on restricted airborne radar programs, higher volume on marine systems programs, ramp-up on international ground-based radar programs and sales growth on the Scalable Agile Beam Radar (SABR) program.

NORTHROP GRUMMAN CORPORATION

First quarter 2026 sales increased $54 million, or 2 percent, primarily due to ramp-up on restricted airborne radar programs and higher volume on marine systems programs, partially offset by lower volume on the Scalable Agile Beam Radar program and airborne electronic warfare programs.

Operating Income

Current Quarter

Third quarter 2025 operating income increased $125 million, or 32 percent, due to a higher operating margin rate and higher sales.

Operating margin rate increased to 16.7 percent from 13.8 percent, principally due to higher net EAC adjustments, including a $68 million favorable EAC adjustment in the restricted advanced microelectronics portfolio largely driven by program efficiencies and risk mitigations.

Year to date 2025 operating income increased $188 million, or 17 percent, primarily due to higher sales and a higher operating margin rate.

Operating margin rate increased to 14.5 percent from 13.7 percent, primarily due to higher net EAC adjustments, including the $68 million favorable EAC adjustment in the restricted advanced microelectronics portfolio described above, partially offset by investments made by the sector in connection with restricted business opportunities during the first quarter of 2025 and changes in mix toward more cost-type contracts.

First quarter 2026 operating income increased $72 million, or 20 percent, primarily due to a higher operating margin rate and higher sales.

Operating margin rate increased to 15.1 percent from 12.9 percent, primarily due to prior year investments made by the sector in connection with restricted business opportunities, as well as higher net EAC adjustments in the current year.

SPACE SYSTEMS

Three Months Ended September 30 % Nine Months Ended September 30 %

$ in millions 2025 2024 Change 2025 2024 Change

Three Months Ended March 31 %

$ in millions 2026 2025 Change

Sales $ 2,480 $ 2,568 (3) %

1 unchanged sentence

Operating margin rate 9.5 % 11.0 %

Current Quarter

Third quarter 2025 sales decreased $172 million, or 6 percent, primarily due to wind-down of work on the restricted space and Next Generation Interceptor (NGI) programs, which reduced sales by $124 million, as well as lower volume on Space Development Agency (SDA) satellite programs.

These decreases were partially offset by a $100 million increase for Commercial Resupply Services (CRS) missions.

Year to date 2025 sales decreased $1.1 billion, or 12 percent, primarily due to wind-down of work on the restricted space and NGI programs, which reduced sales by $635 million, as well as a $195 million decrease for SDA satellite programs.

The decrease was also driven by lower volume on other restricted space programs and the Space Launch System (SLS) Booster, Next Gen Polar (NGP) and Ground-Based Midcourse Defense (GMD) programs, partially offset by higher volume on GEM 63 as that program ramps.

First quarter 2026 sales decreased $88 million, or 3 percent, primarily due to wind-down of work on the NGI program, which reduced sales by $98 million, as well as lower sales on the GEM 63XL program related to the unfavorable EAC adjustment described below.

These decreases were partially offset by higher volume on Space Development Agency satellite programs driven by ramp-up on the Tranche 3 tracking layer award.

Operating Income

Current Quarter

Third quarter 2025 operating income decreased $47 million, or 14 percent, primarily due to a lower operating margin rate and lower sales.

Operating margin rate decreased to 11.0 percent from 12.0 percent principally due to lower net EAC adjustments, including a prior year $39 million favorable EAC adjustment on the Habitation and Logistics Outpost program, partially offset by sales growth on programs with accretive margin rates.

Year to date 2025 operating income decreased $118 million, or 12 percent, due to lower sales.

Operating margin rate of 10.9 percent was comparable with the prior year period.

First quarter 2026 operating income decreased $48 million, or 17 percent, due to a lower operating margin rate and lower sales.

Operating margin rate decreased to 9.5 percent from 11.0 percent, largely due to lower net EAC adjustments, including a $71 million unfavorable adjustment on GEM 63XL associated with a launch anomaly that occurred during the first quarter.

NORTHROP GRUMMAN CORPORATION

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The following table presents product and service sales and operating costs and expenses by segment:

Three Months Ended September 30 Nine Months Ended September 30

Three Months Ended March 31

$ in millions 2026 2025

Segment Information:

Sales Operating Costs and Expenses Sales Operating Costs and Expenses Sales Operating Costs and Expenses Sales Operating Costs and Expenses

Sales Operating Costs and Expenses Sales Operating Costs and Expenses

Aeronautics Systems

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Product Sales and Costs

Current Quarter

Third quarter 2025 product sales increased $430 million, or 5 percent, primarily due to higher volume on military ammunition programs, the IBCS program portfolio and Sentinel at Defense Systems, higher sales on restricted advanced microelectronics, marine systems and international ground-based radar programs at Mission Systems, and higher volume on TACAMO and F-35 at Aeronautics Systems.

These increases were partially offset by wind-down of work on the restricted space and NGI programs and lower volume on SDA satellite programs at Space Systems.

Third quarter 2025 product costs increased $347 million, or 5 percent, consistent with the higher product sales described above.

NORTHROP GRUMMAN CORPORATION

Year to date 2025 product sales were comparable to the prior year and reflect higher sales on restricted airborne radar, marine systems and international ground-based radar programs at Mission Systems and higher volume on Sentinel, military ammunition programs and the IBCS program portfolio at Defense Systems, partially offset by wind-down of work on the restricted space and NGI programs and lower volume on SDA satellite programs at Space Systems.

Year to date 2025 product costs increased $344 million, or 2 percent, reflecting a lower operating margin rate principally due to the $477 million loss provision recorded on the B-21 program at Aeronautics Systems in the first quarter of 2025, partially offset by higher net EAC adjustments at Defense Systems largely driven by Sentinel.

First quarter 2026 product sales increased $437 million, or 6 percent, primarily due to higher sales on B-21 at Aeronautics Systems, as well as higher volume on Sentinel, tactical solid rocket motor programs and across the IBCS portfolio at Defense Systems.

These increases were partially offset by the wind-down of work on the NGI program and lower sales on GEM 63XL at Space Systems.

First quarter 2026 product costs were comparable to the prior year, reflecting a higher operating margin rate principally due to the absence of the prior year B-21 loss provision at Aeronautics Systems and investments made in connection with restricted business opportunities at Mission Systems.

Service Sales and Costs

Current Quarter

Third quarter 2025 service sales were comparable to the prior year and reflect lower restricted sales at Space Systems, partially offset by higher volume on aircraft sustainment services at Aeronautics Systems.

Third quarter 2025 service costs decreased $51 million, or 3 percent, reflecting a higher operating margin rate principally driven by higher net EAC adjustments across Defense Systems and Aeronautics Systems service programs.

Year to date 2025 service sales decreased $136 million, or 2 percent, primarily due to lower service volume at Defense Systems due to the training services divestiture and lower restricted sales at Aeronautics Systems.

Year to date 2025 service costs decreased $162 million, or 3 percent, reflecting a higher operating margin rate principally driven by higher net EAC adjustments across Aeronautics Systems, Mission Systems and Defense Systems service programs.

Backlog consisted of the following as of September 30, 2025 and December 31, 2024:

September 30, 2025 December 31, 2024

First quarter 2026 service sales decreased $24 million, or 1 percent, primarily due to lower restricted sales at Space Systems and lower service volume at Defense Systems due to the training services divestiture, partially offset by higher restricted sales at Aeronautics Systems.

First quarter 2026 service costs decreased $74 million, or 4 percent, reflecting a higher operating margin rate principally driven by higher net EAC adjustments on service programs across each of the sectors.

NORTHROP GRUMMAN CORPORATION

Backlog consisted of the following as of March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

$ in millions Funded Unfunded Total

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Total backlog $ 44,068 $ 51,540 $ 95,608 $ 95,681 — %

Third quarter and year to date 2025 net awards totaled $12.2 billion and $30.4 billion, respectively.

Backlog totaled $91.4 billion and reflects a $150 million reduction to backlog in connection with the training services divestiture during the second quarter of 2025.

Significant third quarter new awards include $4.5 billion for restricted programs (primarily at Space Systems, Mission Systems and Aeronautics Systems), $1.8 billion for Ground-Based Midcourse Defense Weapon System (GWS), $0.5 billion for F-35 (primarily at Aeronautics Systems and Mission Systems), and $0.4 billion for Virginia Class submarines.

First quarter 2026 net awards totaled $9.8 billion and backlog totaled $95.6 billion.

Significant first quarter new awards include $4.9 billion for restricted programs (primarily at Aeronautics Systems, Space Systems, and Mission Systems), $0.5 billion for F-35 (primarily at Aeronautics Systems), $0.5 billion for infrared countermeasures programs, and $0.4 billion for Triton.

LIQUIDITY AND CAPITAL RESOURCES

We are focused on the efficient conversion of operating income into cash to provide for the company’s material cash requirements, including working capital needs, satisfaction of contractual commitments, funding of our pension and OPB plans, investment in our business through capital expenditures, and shareholder return through dividend payments and share repurchases.

At September 30, 2025, we had $2.0 billion in cash and cash equivalents.

We expect cash and cash equivalents and cash generated from operating activities, supplemented by borrowings under credit facilities, commercial paper and/or in the capital markets through our shelf registration with the SEC, if needed, to be sufficient to provide liquidity to the company in the short-term and long-term.

In September 2025, the company entered into a new five-year senior unsecured revolving credit facility in an aggregate principal amount of $3.0 billion.

The 2025 Credit Agreement replaced the company’s prior five-year, $2.5 billion revolving credit facility entered into in August 2022.

NORTHROP GRUMMAN CORPORATION

In April 2025, we renewed our one-year $500 million uncommitted credit facility.

At September 30, 2025, there were no borrowings outstanding under these credit facilities.

In May 2025, we issued $1.0 billion of unsecured senior notes for general corporate purposes, including debt repayment, share repurchases, and working capital.

At March 31, 2026, we had $2.1 billion in cash and cash equivalents.

We expect cash and cash equivalents and cash generated from operating activities, supplemented by borrowings under credit facilities, commercial paper and/or in the capital markets, if needed, to be sufficient to provide liquidity to the company in the short-term and long-term.

The company has a five-year senior unsecured revolving credit facility in an aggregate principal amount of $3.0 billion, and in April 2026, we renewed our one-year $500 million uncommitted credit facility.

At March 31, 2026, there were no borrowings outstanding under these credit facilities;

however, as of March 31, 2026, we had $500 million in commercial paper outstanding, which reduced the amount available for borrowing under our unsecured revolving credit facility by that amount.

Cash Flow Measures

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Operating Cash Flow

The table below summarizes key components of cash provided by operating activities:

Nine Months Ended September 30 %

The table below summarizes key components of cash used in operating activities:

Three Months Ended March 31 %

$ in millions 2026 2025 Change

Net earnings $ 875 $ 481 82 %

B-21 loss provision

Gain on sale of business (231) — NM

Non-cash items (1)

1,219 302 304 %

Pension and OPB contributions (94) (93) 1 %

Changes in trade working capital (1)

(2,074) (2,187) (5) %

Other, net (457) 141 NM

Net cash provided by operating activities $ 860 $ 1,810 (52) %

(1) Includes depreciation and amortization, stock based compensation expense, deferred income taxes and net periodic pension and OPB income.

Year to date 2025 net cash provided by operating activities decreased $950 million as compared with the same period in 2024, primarily due to $1.0 billion of higher net cash taxes, due, in part, to a $500 million federal tax refund received in the prior year.

Higher cash earnings were offset by increased trade working capital largely driven by the timing of collections and advance payments.

Net cash used in operating activities $ (1,656) $ (1,565) (6) %

(1) Beginning in the fourth quarter of 2025, the company redefined trade working capital presented in this table to include accounts receivable, unbilled receivables, inventoried costs, trade accounts payable and advance payments and billings in excess of costs incurred.

Prior period amounts and disclosures have been recast to conform to the current period presentation.

First quarter 2026 net cash used in operating activities was comparable with the same period in 2025.

Net cash used in operating activities reflects increases in trade working capital, consistent with the company’s historical timing of operating cash flows, which are generally more heavily weighted towards the second half of the year.

Free Cash Flow

Free cash flow, as reconciled in the table below, is a non-GAAP measure defined as net cash provided by or used in operating activities less capital expenditures, and may not be defined and calculated by other companies in the same manner.

NORTHROP GRUMMAN CORPORATION

We use free cash flow as a key factor in our planning for, and consideration of, acquisitions, the payment of dividends and stock repurchases.

This non-GAAP measure may be useful to investors and other users of our financial statements as a supplemental measure of our cash performance, but should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating cash flows presented in accordance with GAAP.

The table below reconciles net cash provided by operating activities to free cash flow:

Nine Months Ended September 30 %

The table below reconciles net cash used in operating activities to free cash flow:

Three Months Ended March 31 %

$ in millions 2026 2025 Change

Net cash provided by operating activities

$ 860 $ 1,810 (52) %

Net cash used in operating activities $ (1,656) $ (1,565) (6) %

Capital expenditures (167) (256) (35) %

Free cash flow $ (1,823) $ (1,821) — %

Year to date 2025 free cash flow decreased $787 million as compared with the same period in 2024 due to a $950 million decrease in net cash provided by operating activities, partially offset by a $163 million reduction in capital expenditures.

First quarter 2026 free cash flow was comparable with the prior year period and reflects a $91 million increase in net cash used in operating activities and an $89 million reduction in capital expenditures.

Investing Cash Flow

Year to date 2025 net cash used in investing activities decreased $460 million, or 48 percent, as compared with the same period in 2024 principally due to $333 million in proceeds from the sale of the training services business as well as lower capital expenditures.

NORTHROP GRUMMAN CORPORATION

First quarter 2026 net cash used in investing activities decreased $84 million, or 33 percent, as compared with the same period in 2025 principally due to lower capital expenditures.

Financing Cash Flow

Year to date 2025 net cash used in financing activities increased $2.1 billion, or 331 percent, as compared with the same period in 2024, primarily due to a $3.0 billion net decrease in cash from long-term debt, partially offset by a $905 million decrease in share repurchases.

First quarter 2026 net cash used in financing activities decreased $362 million, or 43 percent, as compared with the same period in 2025, primarily due to a $412 million decrease in share repurchases.

Credit Facilities, Commercial Paper and Financial Arrangements - See Note 7 to the financial statements for further information on our credit facilities, commercial paper and our use of standby letters of credit and guarantees.

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government funding and program support more broadly, including as a result of a prolonged continuing resolution and/or government shutdown, and/or related to the global security environment or other global events

NORTHROP GRUMMAN CORPORATION

• significant delays or reductions in payments as a result of or related to a breach of the debt ceiling or a prolonged government shutdown

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• changes in procurement and other laws, SEC, DoW and other rules and regulations, including changes through executive orders, contract terms and practices applicable to our industry, findings by the U.S.

government as to

NORTHROP GRUMMAN CORPORATION

our compliance with such requirements, more aggressive enforcement of such requirements and changes in our customers’ business practices globally

government as to our compliance with such requirements, more aggressive enforcement of such requirements and changes in our customers’ business practices and preferences globally

• the improper conduct of employees, agents, subcontractors, suppliers, business partners or joint ventures in which we participate, including the impact on our reputation and our ability to do business

• environmental matters, including climate change, unforeseen environmental costs and government and third-party claims

• environmental matters, unforeseen environmental costs and government and third-party claims

• unanticipated changes in our tax provisions or exposure to additional tax liabilities

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• cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners, and changes in related regulations

• the performance and viability of our subcontractors and suppliers and the availability and pricing of raw materials, chemicals, parts and components, particularly with inflationary pressures, increased costs, shortages in labor and financial resources, supply chain disruptions, and extended material lead times

• the performance and viability of our subcontractors and suppliers and the availability and pricing of raw materials, critical minerals and metals, chemicals, parts and components, particularly with inflationary pressures, increased costs, pricing changes, shortages in labor and financial resources, supply chain disruptions, and extended material lead times

• our ability to attract and retain a qualified and talented workforce with the necessary security clearances to meet our performance obligations

• our exposure to additional risks as a result of our international business, including risks related to global security, geopolitical and economic factors, misconduct, suppliers, laws and regulations

• natural disasters, epidemics, pandemics and similar outbreaks and other significant disruptions

• our exposure to additional risks as a result of our international business, including risks related to global security and strategic alliances, geopolitical and economic factors, misconduct, suppliers, laws and regulations

• our ability to innovate, develop new products and technologies, progress and benefit from digital transformation and maintain technologies to meet the needs of our customers

• natural disasters, epidemics, pandemics and similar outbreaks and other significant disruptions

• products and services we provide related to hazardous and high risk operations, including the production and use of such products, which subject us to various environmental, regulatory, financial, reputational and other risks

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• changes in business conditions that could impact business investments and/or recorded goodwill or the value of other long-lived assets, and other potential future liabilities

NORTHROP GRUMMAN CORPORATION

You are urged to consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of forward-looking statements.

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There have been no material changes to our market risks from those discussed in our 2025 Annual Report on Form 10-K.

NORTHROP GRUMMAN CORPORATION

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis