noc-20231026
falseNORTHROP GRUMMAN CORP /DE/000113342100011334212023-10-262023-10-26

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
October 26, 2023
NORTHROP GRUMMAN CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware1-1641180-0640649
(State or Other Jurisdiction
of Incorporation or Organization)
 
(Commission File Number)
 
(IRS Employer
Identification Number)

2980 Fairview Park Drive, Falls Church, VA 22042
(Address of principal executive offices)(Zip Code)

(703) 280-2900
(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockNOCNew York Stock Exchange


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



ITEM 2.02. Results of Operations and Financial Condition.
On October 26, 2023, Northrop Grumman Corporation issued an earnings release announcing its financial results for the quarter ended September 30, 2023, under the heading “Northrop Grumman Reports Third Quarter 2023 Financial Results.” The earnings release is furnished as Exhibit 99.
ITEM 9.01. Financial Statements and Exhibits.
    
   
(d) Exhibits 
   
  Furnished 
   
  Exhibit 99 — Earnings Release dated October 26, 2023 



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

       
  
  NORTHROP GRUMMAN CORPORATION
  (Registrant)
   By: /s/ Jennifer C. McGarey
     (Signature)
Jennifer C. McGarey
Corporate Vice President and Secretary

Date: October 26, 2023



Exhibit Index
 
 
Exhibit No.
 
Exhibit 101 — Northrop Grumman Corporation Current Report on Form 8-K dated October 26, 2023, formatted as inline XBRL (Extensible Business Reporting Language): Cover Page. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 104 — Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)



Document


Exhibit 99
https://cdn.kscope.io/a7b43a1cf3b995a0dc29270c80fc6d80-nocearningsreleasengclogoa.jpg
News Release
 Contact:Vic Beck (Media)
 703-280-4456 (office)
 vic.beck@ngc.com
 
 Todd Ernst (Investors)
 703-280-4535 (office)
 todd.ernst@ngc.com
Northrop Grumman Reports Third Quarter 2023 Financial Results
Net awards of $15 billion; book to bill of 1.53
Total backlog rises to record $84 billion
Sales increased 9 percent to $9.8 billion
Operating income increased 20 percent; segment operating income1 increased 8 percent
Diluted earnings per share of $6.18
Operating cash flow of $1.2 billion
Company increases 2023 sales guidance by $400 million to ~$39 billion
Company reaffirms diluted EPS and free cash flow(1) guidance

FALLS CHURCH, Va. – October 26, 2023 – Northrop Grumman Corporation (NYSE: NOC) reported third quarter 2023 sales increased 9 percent to $9.8 billion, as compared with $9.0 billion in the third quarter of 2022. Third quarter 2023 sales reflect continued strong demand for our products and services. Third quarter 2023 net earnings totaled $937 million, or $6.18 per diluted share, as compared with $915 million, or $5.89 per diluted share, in the third quarter of 2022. Net earnings were reduced by $156 million, or $1.00 per diluted share, as a result of lower net FAS/CAS pension income, and net earnings were increased by $67 million, or $0.44 per diluted share, as a result of the sale of a minority interest in an Australian business.
“We had another strong quarter with solid performance on our programs, a new record backlog, and growth across all four of our businesses,” said Kathy Warden, chair, chief executive officer and president. “Based on our year-to-date results and increasing demand for our products, we are raising our 2023 sales guidance. We are also providing an initial 2024 outlook that reflects our expectation for solid revenue, operating income and free cash flow growth.”
1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com

Northrop Grumman Reports Third Quarter 2023 Financial Results
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Consolidated Operating Results and Cash Flows
Three Months Ended September 30Nine Months Ended September 30
$ in millions, except per share amounts20232022Change20232022Change
Sales
Aeronautics Systems$2,766 $2,537 9%$7,876 $7,774 1%
Defense Systems1,421 1,345 6%4,217 3,922 8%
Mission Systems2,628 2,456 7%7,832 7,469 5%
Space Systems3,506 3,163 11%10,344 8,997 15%
Intersegment eliminations(546)(530)(1,617)(1,593)
Total sales9,775 8,971 9%28,652 26,569 8%
Operating income
Aeronautics Systems283 262 8%798 827 (4%)
Defense Systems182 158 15%508 481 6%
Mission Systems386 368 5%1,147 1,166 (2%)
Space Systems312 290 8%908 861 5%
Intersegment eliminations(74)(71)(218)(218)
Segment operating income1
1,089 1,007 8%3,143 3,117 1%
Segment operating margin rate1
11.1 %11.2 %(10) bps11.0 %11.7 %(70) bps
FAS/CAS operating adjustment(20)(55)(64%)(62)(152)(59%)
Unallocated corporate expense:
Intangible asset amortization and PP&E step-up depreciation(31)(60)(48%)(92)(181)(49%)
Other unallocated corporate expense(22)(48)(54%)(59)(89)(34%)
Unallocated corporate expense(53)(108)(51%)(151)(270)(44%)
Total operating income$1,016 $844 20%$2,930 $2,695 9%
Operating margin rate10.4 %9.4 %100 bps10.2 %10.1 %10 bps
Interest expense(141)(122)16%(417)(386)8%
Non-operating FAS pension benefit132 376 (65%)397 1,129 (65%)
Other, net111 (8)NM193 (54)NM
Earnings before income taxes1,118 1,090 3%3,103 3,384 (8%)
Federal and foreign income tax expense181 175 3%512 568 (10%)
Effective income tax rate16.2 %16.1 %10 bps16.5 %16.8 %(30) bps
Net earnings $937 $915 2%$2,591 $2,816 (8%)
Diluted earnings per share6.18 5.89 5%17.00 18.06 (6%)
Weighted-average diluted shares outstanding, in millions151.7 155.3 (2%)152.4 155.9 (2%)
Net cash provided by operating activities$1,228 $1,335 (8%)$1,445 $650 122%
Capital expenditures(359)(296)21%(972)(803)21%
Proceeds from sale of equipment to a customer 100 (100%) 100 (100%)
Adjusted free cash flow1
$869 $1,139 (24%)$473 $(53)NM





1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
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Northrop Grumman Reports Third Quarter 2023 Financial Results
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Sales
Third quarter 2023 sales increased $804 million, or 9 percent, due to higher sales at all four sectors. Third quarter 2023 sales reflect continued strong demand for our products and services.
Operating Income and Margin Rate
Third quarter 2023 operating income increased $172 million, or 20 percent, due to higher segment operating income, lower unallocated corporate expense and a reduction in the FAS/CAS operating adjustment. Third quarter 2023 operating margin rate increased to 10.4 percent principally due to the lower unallocated corporate expense and FAS/CAS operating adjustment.
Segment Operating Income and Margin Rate
Third quarter 2023 segment operating income increased $82 million, or 8 percent, primarily due to higher sales. Third quarter 2023 segment operating margin rate was comparable with the prior year period.
Federal and Foreign Income Taxes
The third quarter 2023 ETR of 16.2 percent was comparable with the prior year period and reflects an increase in research credits, partially offset by higher interest expense on unrecognized tax benefits.
Net Earnings and Diluted EPS
Third quarter 2023 net earnings increased $22 million, or 2 percent, primarily due to $172 million of higher operating income and a $97 million gain recognized upon the sale of our minority investment in an Australian business, partially offset by a $244 million reduction in the non-operating FAS pension benefit. Third quarter 2023 diluted earnings per share increased 5 percent, reflecting a 2 percent increase in net earnings and a 2 percent reduction in weighted-average diluted shares outstanding.
Cash Flows
Third quarter 2023 net cash provided by operating activities decreased $107 million principally due to increased cash collections in the prior year period resulting from billing delays at the end of the second quarter of 2022. Third quarter 2023 adjusted free cash flow decreased $270 million due to lower cash provided by operating activities, a reduction in proceeds from the sale of equipment to a customer and higher capital expenditures.
Awards and Backlog
Third quarter and year to date 2023 net awards totaled $15.0 billion and $33.9 billion, respectively, and backlog totaled $83.9 billion. Significant third quarter new awards include $3.6 billion for restricted programs (primarily at Space Systems, Aeronautics Systems, and Mission Systems), $1.3 billion for E-2, $0.7 billion for Space Development Agency (SDA) Tranche 2 Transport Layer and $0.5 billion for Guided Multiple Launch Rocket System (GMLRS).
1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com

Northrop Grumman Reports Third Quarter 2023 Financial Results
4

Segment Operating Results
AERONAUTICS SYSTEMS
Three Months Ended September 30%Nine Months Ended September 30
%
$ in millions20232022Change20232022Change
Sales$2,766$2,5379 %$7,876$7,7741 %
Operating income2832628 %798827(4)%
Operating margin rate10.2 %10.3 %10.1 %10.6 %
Sales
Third quarter 2023 sales increased $229 million, or 9 percent, primarily due to higher volume in Manned Aircraft. Higher sales on restricted programs and E-2 were partially offset by lower volume on F/A-18 largely due to post Multi-Year Procurement 4 (MYP4) contract award timing.
Operating Income
Third quarter 2023 operating income increased $21 million, or 8 percent, primarily due to higher sales. Operating margin rate was comparable with the prior year period.
DEFENSE SYSTEMS
Three Months Ended September 30%Nine Months Ended September 30
%
$ in millions20232022Change20232022Change
Sales$1,421$1,3456 %$4,217$3,9228 %
Operating income18215815 %5084816 %
Operating margin rate12.8 %11.7 %12.0 %12.3 %
Sales
Third quarter 2023 sales increased $76 million, or 6 percent, primarily due to higher volume in Battle Management & Missile Systems, which was driven by several programs, including Integrated Air and Missile Defense Battle Command System (IBCS), ammunition programs, GMLRS, and Hypersonic Attack Cruise Missile (HACM).
Operating Income
Third quarter 2023 operating income increased $24 million, or 15 percent, due to a higher operating margin rate and higher sales. Operating margin rate increased to 12.8 percent from 11.7 percent primarily due to higher net EAC adjustments at Battle Management & Missile Systems.
MISSION SYSTEMS
Three Months Ended September 30%Nine Months Ended September 30
%
$ in millions20232022Change20232022Change
Sales$2,628$2,4567 %$7,832$7,4695 %
Operating income3863685 %1,1471,166(2)%
Operating margin rate14.7 %15.0 %14.6 %15.6 %
Sales
Third quarter 2023 sales increased $172 million, or 7 percent, primarily due to higher restricted sales in the Networked Information Solutions business area, as well as higher volume on marine systems programs, partially offset by lower volume on the Ground/Air Task Oriented
1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
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Northrop Grumman Reports Third Quarter 2023 Financial Results
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Radar (G/ATOR) program largely driven by material receipts and full-rate production (FRP) 5 contract award timing.
Operating Income
Third quarter 2023 operating income increased $18 million, or 5 percent, due to higher sales, partially offset by a lower operating margin rate. Operating margin rate decreased to 14.7 percent from 15.0 percent primarily due to changes in contract mix toward more cost-type content.
SPACE SYSTEMS
Three Months Ended September 30%Nine Months Ended September 30
%
$ in millions20232022Change20232022Change
Sales$3,506$3,16311 %$10,344$8,99715 %
Operating income3122908 %9088615 %
Operating margin rate8.9 %9.2 %8.8 %9.6 %
Sales
Third quarter 2023 sales increased $343 million, or 11 percent, due to higher sales in both business areas. Launch & Strategic Missiles sales increased primarily due to ramp-up on development programs, including the Ground Based Strategic Deterrent (GBSD), and Next Generation Interceptor (NGI), as well as higher volume on the Space Launch System (SLS) booster program. Sales in the Space business area were driven by higher volume on restricted programs and the Next-Generation Overhead Persistent Infrared Polar (NextGen Polar) program, partially offset by lower sales on the HALO program.
Operating Income
Third quarter 2023 operating income increased $22 million, or 8 percent, due to higher sales, partially offset by a lower operating margin rate. Operating margin rate decreased to 8.9 percent from 9.2 percent primarily due to lower net EAC adjustments, partially offset by a $16 million benefit from insurance recoveries in our commercial space business.
1 Non-GAAP measure - see definitions at the end of this earnings release.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com

Northrop Grumman Reports Third Quarter 2023 Financial Results
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Guidance
    Financial guidance, as well as outlook, trends, expectations and other forward looking statements provided by the company for 2023 and beyond, reflect the company's judgment based on the information available to the company at the time of this release. The company’s financial guidance and outlook for 2023 and beyond reflect what the company currently anticipates will be the impacts on the company from, among other factors, the global macroeconomic, health, security, and political/budget environments, including the impacts from inflationary pressures and labor and supply chain challenges; COVID-19; hostilities and changes in the threat environment; changes in government budget, appropriations and procurement priorities and processes; changes in the regulatory environment; and changes in support for our programs. We are not assuming, and the company’s financial guidance and outlook for 2023 and beyond do not reflect any impacts on the company from, a potential extended continuing resolution, a prolonged government shutdown, or application of spending limits or sequestration. However, the company cannot predict how these factors will evolve or what impacts they will have, and there can be no assurance that the company’s current expectations or underlying assumptions are correct. These factors can affect the company’s ability to achieve guidance or meet expectations.
For additional factors that may impact the company’s ability to achieve guidance or meet expectations, please see the “Forward-Looking Statements” section in this release and our Form 10-Q.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
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Northrop Grumman Reports Third Quarter 2023 Financial Results
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2023 Guidance
($ in millions, except per share amounts)As of 7/27/2023As of 10/26/2023
Sales$38,400$38,800
~$39,000
Segment operating income1
$4,300$4,400$4,300$4,400
Total net FAS/CAS pension adjustment2
~$450
~$450
Unallocated corporate expense
Intangible asset amortization & PP&E step-up depreciation
~$120
~$120
Other items
~$150
~$150
Operating income$3,950$4,050$3,950$4,050
Interest expense
~$550
~$550
Effective tax rate %~17%~17%
Weighted average diluted shares outstandingMid 152Mid 152
MTM-adjusted EPS1
$22.45$22.85$22.45$22.85
Capital expenditures$1,650$1,700$1,650$1,700
Adjusted free cash flow1
$1,850$2,150$1,850$2,150
2023 Segment Guidance
As of 7/27/2023As of 10/26/2023
Sales ($B)OM Rate %Sales ($B)OM Rate %
Aeronautics SystemsMid $10~10%Mid to High $10~10%
Defense SystemsMid to High $5~12%Mid to High $5~12%
Mission SystemsHigh $10Low 15%High $10~15%
Space SystemsHigh $13~9%~$14~9%
Eliminations~($2.2)Mid 13%~($2.2) Mid 13%
1Non-GAAP measure - see definitions at the end of this earnings release.
2Total Net FAS/CAS pension adjustment is presented as a single amount consistent with our historical presentation, and includes $160 million of expected CAS pension expense and $240 million of FAS pension service expense, both of which are reflected in operating income. Non-operating FAS pension benefit of $530 million is reflected below operating income, and the total net FAS/CAS pension adjustment is $450 million.

Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
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Northrop Grumman Reports Third Quarter 2023 Financial Results
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About Northrop Grumman
Northrop Grumman will webcast its earnings conference call at 9:00 a.m. Eastern Time on October 26, 2023. A live audio broadcast of the conference call will be available on the investor relations page of the company’s website at www.northropgrumman.com.
Northrop Grumman is a leading global aerospace and defense technology company. Our pioneering solutions equip our customers with the capabilities they need to connect and protect the world, and push the boundaries of human exploration across the universe. Driven by a shared purpose to solve our customers’ toughest problems, our employees define possible every day.

###
Forward-Looking Statements
This earnings release and the information we are incorporating by reference, and statements to be made on the earnings conference call, contain or may contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “will,” “expect,” “anticipate,” “intend,” “may,” “could,” “should,” “plan,” “project,” “forecast,” “believe,” “estimate,” “guidance,” “outlook,” “trends,” “goals” and similar expressions generally identify these forward-looking statements.
Forward-looking statements include, among other things, statements relating to our future financial condition, results of operations and/or cash flows. Forward-looking statements are based upon assumptions, expectations, plans and projections that we believe to be reasonable when made, but which may change over time. These statements are not guarantees of future performance and inherently involve a wide range of risks and uncertainties that are difficult to predict. Specific risks that could cause actual results to differ materially from those expressed or implied in these forward-looking statements include, but are not limited to, those identified and discussed more fully in the section entitled “Risk Factors” in the Form 10-K for the year ended December 31, 2022, and from time to time in our other filings with the Securities and Exchange Commission (SEC). These risks and uncertainties are amplified by the global macroeconomic, health, security and political environments, including inflationary pressures, labor and supply chain challenges and COVID-19, which have caused and will continue to cause significant challenges, instability and uncertainty. They include:
Industry and Economic Risks
our dependence on the U.S. government for a substantial portion of our business
significant delays or reductions in appropriations and/or for our programs, and U.S. government funding and program support more broadly, including as a result of a prolonged continuing resolution and/or government shutdown, and/or related to hostilities and other global events
significant delays or reductions in payments as a result of or related to a breach of the debt ceiling
the use of estimates when accounting for our contracts and the effect of contract cost growth and our efforts to recover or offset such costs and/or changes in estimated contract costs and revenues, including as a result of inflationary pressures, labor shortages, supply chain challenges and/or other macroeconomic factors, and risks related to management’s
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
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Northrop Grumman Reports Third Quarter 2023 Financial Results
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judgments and assumptions in estimating and/or projecting contract revenue and performance which may be inaccurate
continued pressures from macroeconomic trends, including on costs, schedules, performance and ability to meet expectations
increased competition within our markets and bid protests
Legal and Regulatory Risks
investigations, claims, disputes, enforcement actions, litigation (including criminal, civil and administrative) and/or other legal proceedings
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
changes in procurement and other laws, SEC, DoD and other rules and regulations, contract terms and practices applicable to our industry, findings by the U.S. government as to our compliance with such requirements, more aggressive enforcement of such requirements and changes in our customers’ business practices globally
environmental matters, including unforeseen environmental costs and government and third party claims
unanticipated changes in our tax provisions or exposure to additional tax liabilities
Business and Operational Risks
impacts related to health epidemics and pandemics, including COVID-19
cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners, and changes in related regulations
our ability to attract and retain a qualified, talented and diverse workforce with the necessary security clearances to meet our performance obligations
the performance and viability of our subcontractors and suppliers and the availability and pricing of raw materials and components, particularly with inflationary pressures, increased costs, shortages in labor and financial resources, supply chain disruptions, and extended material lead times
environmental, social and governance matters, including especially climate change, their impacts on our company, our operations and our stakeholders (employees, suppliers, customers, shareholders and regulators), and changes in laws, regulations and priorities related to these issues
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
our ability to meet performance obligations under our contracts, including obligations that require innovative design capabilities, are technologically complex, require certain manufacturing expertise or are dependent on factors not wholly within our control
natural disasters
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
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Northrop Grumman Reports Third Quarter 2023 Financial Results
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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
our ability appropriately to exploit and/or protect intellectual property rights
our ability to develop new products and technologies, progress digital transformation, and maintain technologies, facilities, and equipment to win new competitions and meet the needs of our customers
General and Other Risk Factors
the adequacy and availability of, and ability to obtain, insurance coverage, customer indemnifications or other liability protections
the future investment performance of plan assets, gains or losses associated with changes in valuation of marketable securities related to our non-qualified benefit plans, changes in actuarial assumptions associated with our pension and other postretirement benefit plans and legislative or other regulatory actions impacting our pension and postretirement benefit obligations
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
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. These forward-looking statements speak only as of the date this earnings release is first issued or, in the case of any document incorporated by reference, the date of that document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
This release and the attachments also contain non-GAAP financial measures. A reconciliation to the nearest GAAP measure and a discussion of the company’s use of these measures are included in this release or the attachments.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
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Northrop Grumman Reports Third Quarter 2023 Financial Results
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SCHEDULE 1
NORTHROP GRUMMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(Unaudited)


 Three Months Ended September 30Nine Months Ended September 30
$ in millions, except per share amounts2023202220232022
Sales
Product$7,678 $6,979 $22,390 $20,599 
Service2,097 1,992 6,262 5,970 
Total sales9,775 8,971 28,652 26,569 
Operating costs and expenses
Product6,135 5,589 17,738 16,250 
Service1,599 1,564 4,848 4,669 
General and administrative expenses1,025 974 3,136 2,955 
Total operating costs and expenses8,759 8,127 25,722 23,874 
Operating income1,016 844 2,930 2,695 
Other (expense) income
Interest expense(141)(122)(417)(386)
Non-operating FAS pension benefit132 376 397 1,129 
Other, net111 (8)193 (54)
Earnings before income taxes1,118 1,090 3,103 3,384 
Federal and foreign income tax expense181 175 512 568 
Net earnings$937 $915 $2,591 $2,816 
Basic earnings per share$6.20 $5.92 $17.07 $18.13 
Weighted-average common shares outstanding, in millions151.2 154.6 151.8 155.3 
Diluted earnings per share$6.18 $5.89 $17.00 $18.06 
Weighted-average diluted shares outstanding, in millions151.7 155.3 152.4 155.9 
Net earnings (from above)$937 $915 $2,591 $2,816 
Other comprehensive income (loss), net of tax
Change in cumulative translation adjustment6 (7)11 (22)
Change in other, net(3)— (5)(1)
Other comprehensive income (loss), net of tax3 (7)6 (23)
Comprehensive income$940 $908 $2,597 $2,793 
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
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Northrop Grumman Reports Third Quarter 2023 Financial Results
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SCHEDULE 2
NORTHROP GRUMMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)

$ in millions, except par valueSeptember 30, 2023December 31, 2022
Assets
Cash and cash equivalents$2,082 $2,577 
Accounts receivable, net1,764 1,511 
Unbilled receivables, net6,270 5,983 
Inventoried costs, net1,355 978 
Prepaid expenses and other current assets1,679 1,439 
Total current assets13,150 12,488 
Property, plant and equipment, net of accumulated depreciation of $7,742 for 2023 and $7,258 for 2022
9,173 8,800 
Operating lease right-of-use assets1,714 1,811 
Goodwill17,514 17,516 
Intangible assets, net324 384 
Deferred tax assets330 162 
Other non-current assets2,691 2,594 
Total assets$44,896 $43,755 
Liabilities
Trade accounts payable$2,260 $2,587 
Accrued employee compensation1,927 2,057 
Advance payments and billings in excess of costs incurred3,458 3,609 
Other current liabilities2,660 3,334 
Total current liabilities10,305 11,587 
Long-term debt, net of current portion of $64 for 2023 and $1,072 for 2022
13,793 11,805 
Pension and other postretirement benefit plan liabilities1,147 1,188 
Operating lease liabilities1,736 1,824 
Other non-current liabilities1,987 2,039 
Total liabilities28,968 28,443 
Shareholders’ equity
Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued and outstanding
 — 
Common stock, $1 par value; 800,000,000 shares authorized; issued and outstanding: 2023—150,864,851 and 2022—153,157,924
151 153 
Paid-in capital — 
Retained earnings15,924 15,312 
Accumulated other comprehensive loss(147)(153)
Total shareholders’ equity15,928 15,312 
Total liabilities and shareholders’ equity$44,896 $43,755 
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
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Northrop Grumman Reports Third Quarter 2023 Financial Results
13

SCHEDULE 3
NORTHROP GRUMMAN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months Ended September 30
$ in millions20232022
Operating activities
Net earnings$2,591 $2,816 
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization938 960 
Stock-based compensation64 72 
Deferred income taxes(298)(438)
Net periodic pension and OPB income(230)(895)
Pension and OPB contributions(108)(106)
Changes in assets and liabilities:
Accounts receivable, net(256)(469)
Unbilled receivables, net(287)(1,038)
Inventoried costs, net(396)(171)
Prepaid expenses and other assets(127)(64)
Accounts payable and other liabilities(443)(57)
Income taxes payable, net40 (56)
Other, net(43)96 
Net cash provided by operating activities1,445 650 
Investing activities
Capital expenditures(972)(803)
Proceeds from sale of equipment to a customer 100 
Proceeds from sale of minority investment157 — 
Other, net3 40 
Net cash used in investing activities(812)(663)
Financing activities
Net proceeds from issuance of long-term debt1,995 — 
Payments of long-term debt(1,050)— 
Common stock repurchases(1,154)(1,011)
Cash dividends paid(834)(786)
Payments of employee taxes withheld from share-based awards(51)(50)
Other, net(34)(4)
Net cash used in financing activities(1,128)(1,851)
Decrease in cash and cash equivalents(495)(1,864)
Cash and cash equivalents, beginning of year2,577 3,530 
Cash and cash equivalents, end of period$2,082 $1,666 
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com

Northrop Grumman Reports Third Quarter 2023 Financial Results
14

SCHEDULE 4
NORTHROP GRUMMAN CORPORATION
TOTAL BACKLOG
(Unaudited)


 September 30, 2023December 31, 2022
% Change in 2023
$ in millions
Funded1
Unfunded
Total
Backlog
2
Total
Backlog
2
Aeronautics Systems$9,009 $9,338 $18,347 $19,397 (5)%
Defense Systems6,425 1,713 8,138 7,515 8 %
Mission Systems11,260 4,247 15,507 13,875 12 %
Space Systems9,819 32,120 41,939 37,956 10 %
Total backlog$36,513 $47,418 $83,931 $78,743 7 %
Funded backlog represents firm orders for which funding is authorized and appropriated.
Total backlog excludes unexercised contract options and indefinite delivery, indefinite quantity (IDIQ) contracts until the time the option or IDIQ task order is exercised or awarded.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com

Northrop Grumman Reports Third Quarter 2023 Financial Results
15

SCHEDULE 5
NORTHROP GRUMMAN CORPORATION
SUPPLEMENTAL PER SHARE INFORMATION
(Unaudited)


Three Months Ended September 30Nine Months Ended September 30
$ in millions, except per share amounts2023202220232022
Per share impact of total net FAS/CAS pension adjustment
FAS/CAS operating adjustment$(20)$(55)$(62)$(152)
Non-operating FAS pension benefit132 376 397 1,129 
Total net FAS/CAS pension adjustment112 321 335 977 
Tax effect1
(28)(81)(84)(246)
After-tax impact$84 $240 $251 $731 
Weighted-average diluted shares outstanding, in millions151.7 155.3 152.4 155.9 
Per share impact$0.55 $1.55 $1.65 $4.69 
Per share impact of intangible asset amortization and PP&E step-up depreciation
Intangible asset amortization and PP&E step-up depreciation$(31)$(60)$(92)$(181)
Tax effect1
8 15 23 46 
After-tax impact$(23)$(45)$(69)$(135)
Weighted-average diluted shares outstanding, in millions151.7 155.3 152.4 155.9 
Per share impact$(0.15)$(0.29)$(0.45)$(0.87)
1Based on a 21% federal statutory tax rate and a 5.25% blended state tax rate.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com

Northrop Grumman Reports Third Quarter 2023 Financial Results
16

Non-GAAP Financial Measures Disclosure: This earnings release 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 the text of the release. Definitions for the non-GAAP measures are provided below and reconciliations are provided in the body of the release, except that reconciliations of forward-looking non-GAAP measures are not provided because the company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including, but not limited to, the impact of any mark-to-market pension adjustment. Other companies may define these measures differently or may utilize different non-GAAP measures.
MTM-adjusted EPS: Diluted earnings per share excluding the per share impact of MTM benefit (expense) and related tax impacts. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the company’s underlying financial performance per share by presenting the company’s diluted earnings per share results before the non-operational impact of pension and OPB actuarial gains and losses.
Segment operating income and segment operating margin rate: Segment operating income, as reconciled in the “Consolidated Operating Results and Cash Flows” table within the body of this release, and segment operating margin rate (segment operating income divided by sales) reflect the combined operating income of our four segments less the operating income associated with intersegment sales. Segment operating income includes pension expense allocated to our sectors under FAR and CAS and excludes FAS pension service expense and unallocated corporate items. These measures may be useful to investors and other users of our financial statements as supplemental measures in evaluating the financial performance and operational trends of our sectors. These measures should not be considered in isolation or as alternatives to operating results presented in accordance with GAAP.
Adjusted free cash flow: Net cash provided by or used in operating activities, less capital expenditures, plus proceeds from the sale of equipment to a customer (not otherwise included in net cash provided by or used in operating activities) and the after-tax impact of discretionary pension contributions. Adjusted free cash flow includes proceeds from the sale of equipment to a customer as such proceeds were generated in a customer sales transaction. It also includes the after-tax impact of discretionary pension contributions for consistency and comparability of financial performance. This measure may not be defined and calculated by other companies in the same manner. We use adjusted 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.

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Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com