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NOC · Q2 2026
Archived report (Q2 2026). Latest deep dive →
The quarter in brief
The headline drop is an illusion of comparison — last year's quarter carried a $231M gain on a business sale, without which operating income is roughly flat on 5% higher sales; the real story is product costs growing 9.6% against 5% revenue growth, offset by a 6.3% tax rate and a growing pension tailwind.
Net Earnings
$1,094M
down 6.8% y/y
Total Sales
$10,876M
up 5.1% y/y
Operating Income
$1,096M
down 23.1% y/y
All figures in $M.
| Line item | Amount and change |
|---|---|
| Total Sales | $10,876 · +5.1% |
| Product Costs | $7,155 · +9.6% |
| Service Costs | $1,600 · -0.9% |
| G&A | $1,025 · +0.9% |
| Operating Income | $1,096 · -23.1% · 10.1% margin · прошлый год с разовым +$231 |
| Pension Benefit* | $166 · +21.2% |
| Other, net | $67 · +76% |
| Interest Expense | $161 · -6.9% |
| Pre-Tax Earnings | $1,168 · -18.2% |
| Income Tax | $74 · ETR 6.3% · было 17.7% |
| Net Earnings | $1,094 · -6.8% · $7.68/sh · 10.1% margin |
Verdict: the headline drop is an illusion of comparison — last year's quarter carried a $231M gain on a business sale, without which operating income is roughly flat on 5% higher sales; the real story is product costs growing 9.6% against 5% revenue growth, offset by a 6.3% tax rate and a growing pension tailwind.
Diluted EPS $7.68 (−5.8%). Share count down 1.1% y/y to 142.4M diluted. Non-operating pension benefit $166M, up 21%.
Source and notation
* marks non-cash / ≈ estimated. Source: Northrop Grumman 10-Q (SEC EDGAR).
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- The year-ago quarter included a $231M gain on the sale of a business; strip it out and operating income is close to flat rather than down 23%.
- Cost discipline is the worry: product costs rose 9.6% to $7,155M against 5.1% sales growth — defense production ramps are eating margin.
- Service costs actually fell 0.9% and G&A was nearly flat (+0.9%) — the pressure is concentrated in manufacturing, not overhead.
- Tax rate collapsed to 6.3% ($74M on $1,168M pre-tax) from 17.7% a year ago — without this, net earnings would have fallen sharply rather than 6.8%.
- The pension plan keeps paying: a $166M non-operating FAS benefit (+21% y/y) flows straight into pre-tax earnings, as it has for years.
- Interest expense eased to $161M from $173M; 'Other, net' nearly doubled to $67M.
- Buybacks continue quietly: diluted share count fell from 144.0M to 142.4M, adding about a point to per-share results.
What distorts the picture in this report and what to watch beyond the headlines.
NOC — Northrop Grumman Corporation is a global aerospace and defense technology company that designs and builds military aircraft, spacecraft, and defense systems.
It operates in the United States and serves government and military customers worldwide.
Heads-up
- net income fell 7% y/y in Q2 2026
Most likely because the pension plan keeps paying: a $166M non-operating FAS benefit (+21% y/y) flows straight into pre-tax earnings; cost discipline is the worry: product costs rose 9.6% to $7,155M against 5.1% sales growth. Based on the Q2 2026 report.
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