Northrop Grumman remains in negotiations with the Defense Department on accelerating production of the Air Force’s B-21 stealth bomber and an agreement to do so is expected this quarter, the company’s chief executive said last week.
The B-21 talks are down to the “finer points” and what the “financial implications” are for Northrop Grumman, Kathy Warden, the company’s chairwoman, president and CEO said during an investor call to discuss fourth quarter 2025 financial results.
The company anticipates investing $2 billion to $3 billion over multiple years to help fund the acceleration of the B-21 program, Warden said. The Air Force currently plans to acquire 100 of the bombers but the purchase of dozens more are being considered.
Accelerating B-21 production will result in faster sales growth over several years, Warden said. The company’s financial outlook for 2026 does not include an uptick in B-21 production, she said.
Northrop Grumman reported strong fourth quarter results driven by higher sales across its operating segments, a double-digit rise in net earnings and a tailwind related to pension and post-retirement benefits.
Net income in the fourth quarter ended Dec. 31 increased 13% to $1.4 billion, or $9.99 earnings per share (EPS), from $1.3 billion ($8.66 EPS) a year ago.
Sales in the quarter increased 10% to $11.7 billion from $10.7 billion a year ago. The higher sales were driven primarily by programs at the Aeronautics Systems, which houses the B-21 program and saw an 18% increase from $3.3 billion to $3.9 billion, and Mission Systems segments. Defense Systems, which oversees the Sentinel program, also saw a 7% increase from $2 billion to $2.14 billion.
Overall, in 2025, sales increased 2% to $42 billion and net income remained flat at $4.2 billion ($29.08 EPS). Adjusted earnings in 2025 were $26.34 EPS.
Backlog at the end of 2025 stood at a record $95.7 billion, a 5 percent increase from $91.5 billion a year ago. Free cash flow for the year was $3.3 billion.
During the earnings call, John Greene, the company’s new chief financial officer, said that after January, Northrop Grumman will halt repurchases of its stock to “increase our spending on property, plant and equipment in order to build out the industrial base.” The company’s current dividend payments will be addressed in May with the board of directors, he said, with Warden adding later that dividends will continue but that the upcoming meeting is when the board will review “an annual increase in the dividend.”
President Donald Trump earlier this month issued an executive order calling on major defense prime contractors to stop paying dividends and repurchasing their shares in favor of increasing capital expenditures to boost capacity and speed production timelines.
Warden said her company plans to increase capital expenditures in 2026 in “high impact value generating initiatives” that include solid rocket motors (SRMs)—an area the company has already boosted capacity—missile defense, advanced technologies and classified capabilities.
One way the company has, and continues to, work to speed production is by “directing that talented engineering and operations team to be able to design products that can be fielded more quickly,” she said.
In addition to ongoing expansion of SRM capacity, the company has already moved from building “10s of satellites a year to hundreds” and is planning to accelerate the B-21 program, she said.
Exchange Monitor affiliate Defense Daily first published a version of this story.