Northrop Grumman Corporation · NYSE:NOC
Northrop Grumman — Q4 2025 Earnings Presentation
20 slides from Northrop Grumman's earnings presentation, Jan 27, 2026
Slide 1: Fourth Quarter 2025 Conference Call
Fourth Quarter 2025 Conference Call Kathy Warden John Greene Chair, Chief Executive Officer Corporate Vice President and President and Chief Financial Officer Ken Crews Corporate Vice President of Finance Pictured: Project Talon - the Uncrewed Wingman January 27, 2026
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation and the information we are incorporating by reference, and statements to be made on the earnings conference call, Business and Operational Risks contain or may contain statements that constitute “forward-looking statements” within the meaning of the Priva
Slide 3: Enterprise Summary
Enterprise Summary Robust global demand resulted in a new record backlog of $95.7 billion Full year 2025 organic sales1 up 3% to $42.0 billion, including international growth of 20% Generated $3.3 billion of 2025 free cash flow1 Continue to invest at leading rates in technology development and defen
Slide 4: Backlog
Backlog Five-year average book-to-bill ratio1 of ~1.1x $95.7B $91.5B $84.2B $78.7B $76.0B 2021 2022 2023 2024 2025 2025 Backlog grew to record $95.7 billion 1. Book to Bill ratio defined as net awards divided by sales. Fourth Quarter 2025 Conference Call 4
Slide 5: Q4 Sales
Q4 Sales Three Months Ended December 31 Organic Sales1 ($M) 2024 2025 ▲% 10% Aeronautics Systems $3,331 $3,922 18% Defense Systems 2,003 2,147 7% Organic Sales1 Defense Systems 1,925 2,147 12% Mission Systems 3,144 3,449 10% $11,712 $10,608 Space Systems 2,710 2,859 5% Intersegment Eliminations (502
Slide 6: Q4 Segment Operating Income
Q4 Segment Operating Income1 Three Months Ended December 31 10% ($M) 2024 2025 ▲% Aeronautics Systems $309 $370 20% Defense Systems 209 205 (2)% $1,313 Mission Systems 469 510 9% $1,193 Space Systems 275 322 17% Intersegment Eliminations (69) (94) Total $1,193 $1,313 10% Q4 2024 Q4 2025 Segment oper
Slide 7: Q4 MTM-adjusted EPS Bridge
Q4 MTM-adjusted EPS1 Bridge 13% Q4 2024 $6.39 Segment Performance 0.80 $7.23 $6.39 Net Pension2, Interest and Other 0.04 Q4 2025 $7.23 Q4 2024 Q4 2025 Earnings per share increase driven by continued strong segment performance 1. Non-GAAP financial measure. See Appendix. 2. Net Pension tax effected o
Slide 8: 2026 Company Level Guidance
2026 Company Level Guidance1 ($M), except per share amounts As of 1/27/2026 Sales $43,500 — $44,000 Segment operating income2 $4,850 — $5,000 MTM-adjusted EPS2 $27.40 — $27.90 Free cash flow2 $3,100 — $3,500 2026 guidance projects mid-single digit sales growth and strong free cash flow2 generation 1
Slide 9: 2026 Segment Guidance
2026 Segment Guidance1 As of 1/27/2026 Sales ($B) OM Rate % Aeronautics Systems Mid $13 Low to Mid 9% Defense Systems Mid to High $8 ~10% Mission Systems High $12 High 14% Space Systems ~$11 ~11% Intersegment Eliminations ~($2.4) High 13% Broad based growth expected across all segments in 2026 1. Se
Slide 10: Pension Estimates
Pension Estimates1 as of 1/27/2026 ($M) 2025 Actual 2026E 2027E 2028E Actual / Expected Return on Plan Assets 11.3% 7.5% Discount Rate 5.58% 5.58% Required Funding 99 ~100 Mark-to-Market Pension & OPB Income 527 ($M) 2025 Actual 2026E 2027E 2028E CAS Pension Expense 475 ~245 ~90 ~60 FAS Pension Serv
Slide 11: Summary
Summary Strong 2025 financial results that met or exceeded company level guidance Enduring global demand and record backlog position the company for sustainable growth Purpose built portfolio with strategic alignment to global defense priorities Industry leading capital investments in defense indust
Slide 12: Appendix
Appendix Fourth Quarter 2025 Conference Call 12
Slide 13: 2026 Supplemental Guidance
2026 Supplemental Guidance1 ($M) As of 1/27/2026 Total Net FAS/CAS pension adjustment2 ~$700 Unallocated corporate expense: Intangible asset amortization and PP&E step-up depreciation ~$(65) Other items ~$(280) Operating income $4,540 — $4,690 Interest expense ~$(620) Effective tax rate % Low to Mid
Slide 14: Pension Sensitivities
Pension Sensitivities as of 1/27/2026 Mark to Market / Net Pension Liability1 Inc/(Dec) to Expense ($M) +25 bps ~(630) Discount Rate2 −25 bps ~670 +100 bps ~(300) Plan asset returns (1) −100 bps ~300 FAS Pension Service Expense Inc/(Dec) to Expense ($M) +25 bps ~(6) Discount Rate2 −25 bps ~6 +100 bp
Slide 15: Non-GAAP Definitions
Non-GAAP Definitions Non-GAAP Financial Measures Disclosure: This presentation contains non-GAAP (accounting principles generally accepted in the United States of America) financial measures, as defined by SEC Regulation G and indicated by a footnote in this presentation. Definitions for the non-GAA
Slide 16: Non-GAAP Reconciliations
Non-GAAP Reconciliations Segment Operating Income and Margin Rate Three Months Ended December 31 Year Ended December 31 ($M) 2024 2025 2024 2025 Total sales $10,686 $11,712 $41,033 $41,954 Operating income $1,089 $1,271 $4,370 $4,511 Operating margin rate 10.2% 10.9% 10.6% 10.8% Reconciliation to se
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations MTM-adjusted Net Earnings and EPS Three Months Ended December 31 Year Ended December 31 ($M), except per share amounts 2024 2025 2024 2025 Net Earnings $1,264 $1,427 $4,174 $4,182 MTM benefit (443) (527) (443) (527) MTM-related deferred state tax expense1 23 28 23 28 Federal
Slide 18: Non-GAAP Reconciliations
Non-GAAP Reconciliations Free Cash Flow Three Months Ended December 31 Year Ended December 31 ($M) 2024 2025 2024 2025 Net cash provided by operating activities $2,578 $3,897 $4,388 $4,757 Capital expenditures (816) (662) (1,767) (1,450) Free cash flow $1,762 $3,235 $2,621 $3,307 Fourth Quarter 2025
Slide 19: Non-GAAP Reconciliations
Non-GAAP Reconciliations Organic Sales Three Months Ended December 31 Year Ended December 31 % % ($M) 2024 2025 Change 2024 2025 Change Sales $10,686 $11,712 10% $41,033 $41,954 2% Less: Training services sales (78) — (304) (112) Organic Sales $10,608 $11,712 10% $40,729 $41,842 3% Fourth Quarter 20
Slide 20: Fourth Quarter 2025 Conference Call
Fourth Quarter 2025 Conference Call 20