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Juniper Networks Reports Preliminary Fourth Quarter and Fiscal Year 2013 Financial Results

SUNNYVALE, CA--(Marketwired - Jan 23, 2014) -  Juniper Networks ( NYSE : JNPR )

Q4 2013:

  • Revenue: $1,274 million, up 7% from Q3'13 and up 12% from Q4'12
  • Operating Margin: 15.3% GAAP; 21.9% non-GAAP, up 2.1 pts from Q3'13
  • GAAP Net Income Per Share: $0.30 diluted, includes a $0.04 pre-tax impact from restructuring charges
  • Non-GAAP Net Income Per Share: $0.43 diluted, includes a $0.04 sequential benefit from a lower tax rate, up from $0.33 diluted in Q3'13, and up from $0.28 diluted in Q4'12

Full Year 2013:

  • Revenue: $4,669 million, up 7% from 2012
  • Operating Margin: 12.1% GAAP; 19.2% non-GAAP, up 3.6 pts from 2012
  • GAAP Net Income Per Share: $0.86 diluted, includes a $0.09 pre-tax impact from restructuring charges
  • Non-GAAP Net Income Per Share: $1.28 diluted, up from $0.85 diluted in 2012

Juniper Networks ( NYSE : JNPR ), the industry leader in network innovation, today reported preliminary financial results for the three months and twelve months ended December 31, 2013 and provided its outlook for the three months ending March 31, 2014.

Net revenues for the fourth quarter of 2013 increased 12% year-over-year and increased 7% sequentially to $1,274 million.

Juniper's operating margin for the fourth quarter of 2013 increased to 15.3% on a GAAP basis, from 12.2% in the third quarter of 2013, and increased from 11.5% in the fourth quarter of 2012. Non-GAAP operating margin for the fourth quarter of 2013 increased to 21.9% from 19.8% in the third quarter of 2013, and increased from 18.2% in the fourth quarter of 2012. 

The Company posted GAAP net income of $151.8 million, or $0.30 per diluted share for the fourth quarter of 2013. The GAAP diluted income per share includes a $0.04 pre-tax impact from restructuring charges. Non-GAAP net income was $215.8 million, or $0.43 per diluted share for the fourth quarter of 2013, and includes a $0.04 sequential benefit primarily related to a lower tax rate from a favorable geographic profit mix. Non-GAAP net income per diluted share increased 30% compared to the third quarter of 2013, and increased 54% compared to the fourth quarter of 2012.

For the year ended December 31, 2013, Juniper's net revenues increased 7% on a year-over-year basis to $4,669 million.

For the fiscal year 2013, Juniper's GAAP operating margin was 12.1%, compared to 7.1% for the prior fiscal year. Non-GAAP operating margin for the fiscal year 2013 was 19.2%, compared to 15.6% in the fiscal year 2012.

For the year ended December 31, 2013, GAAP net income was $439.8 million, or $0.86 per diluted share. The GAAP diluted income per share includes a $0.09 pre-tax impact from restructuring charges. Non-GAAP net income was $654.0 million, or $1.28 per diluted share for the fiscal year 2013. Non-GAAP net income per diluted share for the year ended December 31, 2013 increased 51% on a year-over-year basis.

The reconciliation between GAAP and non-GAAP results of operations is provided in a table immediately following the Preliminary Net Revenue by Market table below.

"Juniper delivered a record revenue quarter demonstrating strong growth on a sequential and year on year basis, as well as a strong book-to-bill. Our results reflect our significant opportunity as a world-class provider of innovative High IQ networks and a Cloud-Builder," said Shaygan Kheradpir, chief executive officer of Juniper Networks. "I'm honored and excited to lead Juniper and I look forward to working with our team to help lead the company through the changes required to reach its full potential. My initial priorities are to develop an Integrated Operating Plan that focuses on several value creating initiatives including a more focused strategy on innovation that matters, an improved cost structure, and a capital allocation strategy that results in improved returns. We believe these initiatives will drive value for shareholders, customers, and other stakeholders. We look forward to a constructive dialogue with our shareholders as we execute on these priorities and we will provide the specific details of our plan in the next few weeks."

"In the fourth quarter of 2013, we delivered our sixth consecutive quarter of year-over-year revenue growth, and expanded operating margins to the highest level in 11 quarters. For the full year, our revenue growth was 7 percent and we exited the year with good momentum," said Robyn Denholm, chief financial and operations officer of Juniper Networks. "We also drove significant year-over-year operating margin and earnings per share expansion, finishing the year with operating margins at 19.2 percent, up 23 percent year-over-year. I am pleased with the team's efforts and commitment to executing our strategy to drive top-line growth and maintain a disciplined approach to controlling costs."

Other Financial Highlights
Total cash, cash equivalents, and investments as of December 31, 2013 were $4,098 million, compared to $4,034 million as of September 30, 2013, and $3,837 million as of December 31, 2012.

Juniper's net cash flow from operations for the fourth quarter of 2013 was $390 million, compared to $176 million in the third quarter of 2013, and $155 million in the fourth quarter of 2012. For the year ended December 31, 2013, Juniper generated net cash from operations of $842 million, compared to $642 million in 2012.

Days sales outstanding in accounts receivable ("DSO") was 41 days in the fourth quarter of 2013, compared to 42 days in the prior quarter, and 35 days in the fourth quarter of 2012.

During the fourth quarter of 2013, Juniper Networks repurchased 11.8 million shares at an average price of $20.47 per share for a total of $242 million. For the year ended December 31, 2013, Juniper repurchased 28.9 million shares, at an average share price of $19.76 per share, for a total of $571 million.

Capital expenditures, as well as depreciation and amortization of intangible assets expense during the fourth quarter of 2013, were $50 million and $45 million, respectively. Capital expenditures, as well as depreciation and amortization of intangible assets expense during the fiscal year 2013, were $233 million and $180 million, respectively.

Outlook
Juniper's outlook for the March quarter reflects its expectation that the underlying demand trends in the networking industry will remain healthy in 2014. Please note that Juniper's outlook for March does not include the potential impact of activities related to the execution of its Integrated Operating Plan which will be shared within the next few weeks.

Juniper Networks estimates:

  • Revenue for the first quarter ending March 31, 2014 to be in the range of $1,120 million to $1,160 million.

  • Non-GAAP gross margin will be 64.0%, plus or minus 0.5%.

  • Non-GAAP operating expenses will be flat to slightly down from the fourth quarter 2013.

  • Non-GAAP operating margin for the first quarter will be roughly 17.0% at the midpoint of revenue guidance.

  • Non-GAAP net income per share will range between $0.27 and $0.30 on a diluted basis. This assumes a flat share count and a non-GAAP tax rate of 25%, assuming the federal R&D tax credit will be approved by the end of March. If it is not approved, the tax rate may be higher by 1.5 percentage points and would impact EPS by $0.01.

All forward-looking non-GAAP measures exclude estimates for amortization of intangible assets, share-based compensation expenses, acquisition-related charges, restructuring charges, litigation settlements and resolutions, gain or loss on equity investments, non-recurring income tax adjustments, valuation allowance on deferred tax assets and income tax effect of non-GAAP exclusions. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis.

Conference Call Webcast
Juniper Networks will host a conference call webcast today, January 23, 2014, at 2:00 pm (Pacific Standard Time), to be broadcast live over the Internet at http://investor.juniper.net/investor-relations/default.aspx .

To participate via telephone in the US, the toll free dial-in number is 1-877-407-8033. Outside the US, dial +1-201-689-8033. Please call 10 minutes prior to the scheduled conference call time. The webcast replay will be archived on the Juniper Networks website.

About Juniper Networks
Juniper Networks ( NYSE : JNPR ) delivers innovation across routing, switching and security. From the network core down to consumer devices, Juniper Networks' innovations in software, silicon and systems transform the experience and economics of networking. Additional information can be found at Juniper Networks ( www.juniper.net ) or connect with Juniper on Twitter and Facebook .

Juniper Networks and Junos are registered trademarks of Juniper Networks, Inc. in the United States and other countries. The Juniper Networks and Junos logos are trademarks of Juniper Networks, Inc. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.

Safe Harbor
Statements in this release concerning Juniper Networks' business outlook, economic and market outlook, future financial and operating results, and overall future prospects are forward-looking statements that involve a number of uncertainties and risks. Actual results or events could differ materially from those anticipated in those forward-looking statements as a result of certain factors, including: general economic and political conditions globally or regionally; business and economic conditions in the networking industry; changes in overall technology spending and spending by communication service providers and major customers; the network capacity requirements of communication service providers; contractual terms that may result in the deferral of revenue; increases in and the effect of competition; the timing of orders and their fulfillment; manufacturing and supply chain constraints; ability to establish and maintain relationships with distributors, resellers and other partners; variations in the expected mix of products sold; changes in customer mix; changes in geography mix; customer and industry analyst perceptions of Juniper Networks and its technology, products and future prospects; delays in scheduled product availability; market acceptance of Juniper Networks products and services; rapid technological and market change; adoption of regulations or standards affecting Juniper Networks products, services or the networking industry; the ability to successfully acquire, integrate and manage businesses and technologies; product defects, returns or vulnerabilities; the ability to recruit and retain key personnel; significant effects of tax legislation and judicial or administrative interpretation of tax regulations; currency fluctuations; litigation settlements and resolutions; the potential impact of activities related to the execution of the Juniper Networks Integrated Operating Plan; and other factors listed in Juniper Networks' most recent report on Form 10-Q filed with the Securities and Exchange Commission. All statements made in this press release are made only as of the date set forth at the beginning of this release. Juniper Networks undertakes no obligation to update the information in this release in the event facts or circumstances subsequently change after the date of this press release.

Juniper Networks believes that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to the company's financial condition and results of operations. For further information regarding why Juniper Networks believes that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the discussion below. The following tables and reconciliations can also be found on the Investor Relations website at http://investor.juniper.net/investor-relations/default.aspx .

...
   
   
Juniper Networks, Inc.  
Preliminary Condensed Consolidated Statements of Operations  
(in millions, except per share amounts)  
(unaudited)  
   
    Three Months Ended December 31,   Twelve Months Ended December 31,  
    2013     2012   2013     2012  
Net revenues:                      
  Product   $ 973.5     $ 847.3   $ 3,519.9     $ 3,262.1  
  Service     300.1       293.5     1,149.2       1,103.3  
    Total net revenues     1,273.6       1,140.8     4,669.1       4,365.4  
Cost of revenues:                              
  Product     351.6       296.1     1,276.6       1,204.0  
  Service     118.4       111.7     451.1       452.6  
    Total cost of revenues     470.0       407.8     1,727.7       1,656.6  
Gross margin     803.6       733.0     2,941.4       2,708.8  
Operating expenses:                              
  Research and development     258.7       275.1     1,043.2       1,101.6  
  Sales and marketing     283.2       264.7     1,075.9       1,045.5  
  General and administrative     48.2       51.7     217.3       206.8  
  Restructuring and other charges     18.1       10.6     39.1       46.8  
    Total operating expenses     608.2       602.1     2,375.5       2,400.7  
Operating income     195.4       130.9     565.9       308.1  
Other (expense) income, net     (10.2 )     9.0     (40.4 )     (16.6 )
Income before income taxes     185.2       139.9     525.5       291.5  
Income tax provision     33.4       44.2     85.7       105.0  
Net income   $ 151.8     $ 95.7   $ 439.8     $ 186.5  
                               
Net income per share:                              
  Basic   $ 0.30     $ 0.19   $ 0.88     $ 0.36  
  Diluted   $ 0.30     $ 0.19   $ 0.86     $ 0.35  
Shares used in computing net income per share:                              
  Basic     498.2       507.6     501.8       520.9  
  Diluted     505.6       513.1     510.3       526.2