Northrop Grumman raised its 2026 profit guidance Tuesday after sales increased across its four businesses and its contract backlog reached a record $109.6 billion, even as its third-quarter operating margin narrowed.
The U.S. defense contractor now expects segment operating income of $4.94 billion to $5.04 billion, versus its earlier range of $4.85 billion to $5 billion. Its forecast for mark-to-market-adjusted earnings per share rose to $29.35 to $29.75 from $28.60 to $29.10. Both are non-GAAP measures, which use adjustments that differ from standard accounting results. The per-share measure excludes pension and other postretirement mark-to-market gains or losses, along with related tax effects.
Sales increased 7% to $11.1 billion in the third quarter from $10.4 billion a year earlier. Northrop Grumman attributed the increase to growth in each of its four sectors. Net earnings climbed to $1.12 billion from $1.10 billion, and diluted earnings per share reached $7.89, up from $7.67.
The operating margin fell to 11.4% from 11.9%. The company said a smaller pension accounting adjustment was chiefly responsible for the decline.
New awards totaled $16.4 billion during the quarter, including $2 billion for Sentinel and $1.3 billion for F-35 work. The $109.6 billion backlog surpassed the $105 billion level Northrop Grumman had described as a record in its second-quarter release. Of the latest total, $50.1 billion had authorized and appropriated funding, while $59.5 billion was unfunded.
An earlier EconoTimes preview of defense earnings identified the timing of government funding as a possible pressure on Northrop Grumman’s margins and cash flow.
Northrop Grumman held its 2026 sales forecast at $43.75 billion to $44.25 billion and its adjusted free cash flow projection at $3.1 billion to $3.5 billion. Northrop Grumman said its outlook does not account for a prolonged federal shutdown or possible government spending restraints and reductions.
