Goldman Sachs Highlights Key Takeaways From L-3 Investor Day

L-3 Communications

hosted its annual investor day today in New York, and Goldman Sachs is highlighting the following key takeaways. 1) 2010 guidance was reiterated. 2011 high level guidance was also reiterated, but segment detail was provided. 2) Management alluded to the potential for hundreds of basis points of industry margin compression over several years. 3) In Goldman Sachs' view, there is risk to the 2011 revenue forecast range given multiple re-competes outlined in the AM&M segment, and given the range includes $120 mn from an Afghan training contract and $50-60 mn from a NASA IT contract both of which have not yet been awarded and could be protested even if won, and includes $80-90 mn of Air Seeker revenue, a program that has been continuously delayed. 4) Free cash flow remains a clear bright spot for LLL, and the company expects FCF to remain well above net income for several years given its non-cash expenses related to acquisitions and low capital requirements. L-3 Communications closed Tuesday at $72.51.