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Juniper Networks Reports Preliminary Q4 Results

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1/24/2014
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ADDLESTONE, UK -- 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.

    Juniper Networks Inc. (NYSE: JNPR)

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    1/30/2014 | 10:58:58 PM
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    Not bad for a company with a couple of very demanding investors and undergoing a lot of changes in personnel and strategy.
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