Business · NEWS EXPLAINER
Northrop Grumman backlog reaches $109.6 billion: what rose in Q3 and what guidance changed
Third-quarter awards reached $16.4 billion and sales rose across all four sectors. Earnings guidance moved higher, but sales and free-cash-flow ranges were unchanged.
Northrop Grumman reported $11.122 billion of third-quarter 2026 sales, up 7%, as net awards of $16.4 billion lifted backlog to a record $109.6 billion. Aeronautics and Defense Systems recorded the strongest sales growth.
Diluted earnings per share rose to $7.89. The company raised its full-year MTM-adjusted EPS range to $29.35–$29.75, while retaining sales guidance of $43.75–$44.25 billion and adjusted free cash flow guidance of $3.1–$3.5 billion.
Awards pushed backlog to a new high
Northrop Grumman recorded $16.4 billion of net awards in the third quarter and ended September with $109.6 billion of backlog, producing a 1.5 book-to-bill ratio. The largest disclosed awards included $4.6 billion of restricted work, $2.0 billion for Sentinel, $1.4 billion for Virginia-class submarines, $1.3 billion for F-35 work and $1.0 billion for E-2. Backlog is contracted future work, not revenue already earned.
Sales grew across all four operating sectors
Quarterly sales rose 7% to $11.122 billion. Aeronautics Systems grew 14%, Defense Systems 12%, Mission Systems 2% and Space Systems 2%. The company attributed Aeronautics growth to F-35 timing and sustainment, higher B-21 sales and B-2 sustainment; Defense Systems benefited from Sentinel, extended-range guided rockets and tactical solid rocket motors.
Profit improved, while margins need context
Net earnings increased 2% to $1.124 billion and diluted earnings per share rose 3% to $7.89. Segment operating income grew 5% to $1.345 billion, but total operating margin fell to 11.4% from 11.9% and segment margin eased to 12.1% from 12.3%. A lower tax rate and pension benefit helped net earnings, so the result was not simply a uniform margin expansion.
Cash flow strengthened in the quarter
Operating cash flow increased 12% to $1.745 billion. Adjusted free cash flow rose 44% to $1.810 billion, helped by proceeds from equipment sold to a customer as well as stronger operating cash flow. The release identifies adjusted free cash flow as a non-GAAP measure, so it should be read with the company reconciliation rather than treated as a direct substitute for GAAP cash flow.
The company raised earnings guidance, not every target
Northrop Grumman lifted 2026 MTM-adjusted earnings guidance to $29.35–$29.75 a share from $28.60–$29.10 and raised the midpoint of segment operating income guidance. It kept sales guidance at $43.75–$44.25 billion and adjusted free cash flow guidance at $3.1–$3.5 billion. The company also said its outlook does not assume a prolonged government shutdown or new spending limits, leaving budget, supply-chain and program-execution risks unresolved.
