Company: NOC
Filing Date: 2025-10-21
Form Type: 10-Q
Source: 0001133421-25-000053
Chunk: 44

Company: NORTHROP GRUMMAN CORP /DE/
Filing Date: 2025-10-21
Form: 10-Q
Item: Part I, Item 1
Chunk 44
---
 approval. Based on this preliminary execution framework, we updated our estimated profitability on the program and recognized a $76 million favorable EAC adjustment during the second quarter of 2025 largely related to our expectations for achieving certain contract incentives.

During the third quarter of 2025, we reviewed our estimated profitability on the Sentinel program and made no significant changes. If our estimated cost to complete the restructured EMD effort or our expectations for achieving contract incentives are more or less favorable than what we have estimated, our financial position, results of operations and/or cash flows could be materially affected.

CONSOLIDATED OPERATING RESULTS

For purposes of the operating results discussion below, we assess our performance using certain financial measures that are not calculated in accordance with GAAP. Organic sales is defined as total sales excluding sales attributable to the company's former training services business. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the company’s underlying sales growth as well as in understanding our ongoing business and future sales trends by presenting the company’s sales adjusted for the impact of the divestiture.

We reconcile this non-GAAP financial measure to its most directly comparable GAAP financial measure below. This non-GAAP measure may not be defined and calculated by other companies in the same manner and should not be considered in isolation or as an alternative to operating results presented in accordance with GAAP.

Selected financial highlights are presented in the table below:

Three Months Ended September 30%Nine Months Ended September 30%$ in millions, except per share amounts20252024Change20252024ChangeSales$10,423 $9,996 4 %$30,242 $30,347 — %Operating costs and expenses9,181 8,876 3 %27,233 27,066 1 %Operating costs and expenses as a % of sales88.1%88.8%90.1%89.2%Gain on sale of business— — NM231 — NMOperating income1,242 1,120 11 %3,240 3,281 (1)%Operating margin rate11.9%11.2%10.7%10.8%Federal and foreign income tax expense223 162 38 %573 555 3 %Effective income tax rate16.9%13.6%17.2%16.0%Net earnings1,100 1,026 7 %2