Company Contact:
 

Kevin Scull
 

Wayside Technology Group, Inc.
 

Vice President and Chief Accounting Officer
 

(732)-389-8950
 

kevin.scull@waysidetechnology.com
   

WAYSIDE TECHNOLOGY GROUP, INC. REPORTS THIRTEENTH CONSECUTIVE QUARTER OF DOUBLE DIGIT REVENUE GROWTH;
SALES INCREASE 37%, INCOME FROM OPERATIONS INCREASES 38%

SHREWSBURY, NJ, October 26, 2006 - Wayside Technology Group, Inc. (NASDAQ: WSTG)

- Sales: $48.7 million, up 37% year-over-year

- Gross profit: $4.4 million, up 13% year-over-year

- Income from operations: $1.3 million, up 38% year-over-year

- Net income: $0.9 million, up 42% year-over-year

The results will be discussed in a conference call to be held on Friday, October 27, 2006 at 10:00 AM Eastern time. The dial-in telephone number is (866) 802-4323 and the pass code is "WSTG".

This conference call will be available via live webcast - in listen-mode only - at www.earnings.com. A replay will be available on our website at www.waysidetechnology.com.

"The third quarter of 2006 was a great quarter, not only financially, but also operationally. This quarter was the thirteenth consecutive quarter of double digit revenue growth as we continue to deliver excellent results," said Simon F. Nynens, chairman and chief executive officer.

"In July, we successfully launched TechXtend, Inc. (www.techxtend.com), a new division specifically focused on providing hardware, software and consultancy services to corporate customers and IT organizations. In August, we officially became Wayside Technology Group, Inc. and launched a new corporate website (www.waysidetechnology.com) specifically focused on our partners and investors. In September, we released an updated website for our Programmer's Paradise division, www.programmers.com. The site now features "programmers TV" product videos, enhanced and accelerated search capabilities, more content than ever, and customized pricing/benefits for our best customers. Clearly all of our employees are dedicated to making Wayside Technology Group, Inc. a success," said Simon Nynens.

Net sales for the quarter ending September 30, 2006 were $48.7 million compared with $35.5 million in the third quarter of 2005, a 37% increase. Total sales for our Programmer's Paradise division were $17.2 million compared to $14.0 million in the third quarter of 2005, representing a 23% increase. Total sales for our Lifeboat division were $31.5 million compared to $21.5 million in the third quarter of 2005, representing a 46% increase.

Gross profit for the quarter ending September 30, 2006 was $4.4 million compared with $3.9 million in the third quarter of 2005, a 13% increase. Total gross profit for our Programmer's Paradise division was $2.1 million compared to $1.9 million in the third quarter of 2005, representing a 9% increase. Total gross profit for our Lifeboat division was $2.3 million compared to $2.0 million in the third quarter of 2005, representing a 17% increase.

Gross profit margin, as a percentage of net sales, for the quarter ending September 30, 2006 was 9.0% compared to 10.9% in the third quarter of 2005. Gross profit margin for our Programmer's Paradise division was 12.2% compared to 13.8% in the third quarter of 2005. Gross profit margin for our Lifeboat division was 7.3% compared to 9.1% in the third quarter of 2005, mainly a result of the competitive nature of our business and a shift in our product mix.

Total selling, general, and administrative ("SG&A") expenses for the third quarter of 2006 were $3.1 million compared to $3.0 million in the third quarter of 2005 or an increase of $0.1 million or 5%. This increase is mainly due to $0.2 million of compensation expenses in the third quarter of 2006 related to the implementation of FAS 123(R) for stock based compensation. As a percentage of net sales, SG&A expenses for the third quarter of 2006 were 6.4% compared to 8.3% in the third quarter of 2005.

Third quarter income from operations in 2006 was $1.3 million compared to $0.9 million in the third quarter of 2005, representing a 38% increase. Third quarter net income in 2006 was $0.9 million compared to $0.6 million in the third quarter of 2005.

About Wayside Technology Group, Inc.

Wayside Technology Group, Inc. (NASDAQ: WSTG) was founded in 1982 and is a unified and integrated technology company providing products and solutions for corporate resellers, VARs, and developers, as well as business, government and educational entities. The company generated sales of $138 million in 2005, and was ranked No. 8 on BusinessWeek's list of hot growth companies in June 2006. The company offers technology products from software publishers and manufacturers such as Microsoft, Computer Associates, IBM, VMware, Borland, Quest Software, Compuware, Infragistics, ComponentOne, Macrovision, and Adobe.

Additional information can be found by visiting www.waysidetechnology.com.

The statements in this release concerning the Company's future prospects are forward-looking statements that involve certain risks and uncertainties. Such risks and uncertainties include the continued acceptance of the Company's distribution channel by vendors and customers, the timely availability and acceptance of new products, and contribution of key vendor relationships and support programs. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in our filings with the Securities and Exchange Commission.

- Tables Follow -

WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

 

September 30, 2006        

  

December 31, 2005         
 

(Unaudited)  

    

ASSETS

Current assets

      

   Cash and cash equivalents

$       11,193

  

$         7,369

   Marketable securities

9,011

  

7,884

   Accounts receivable, net

22,345

  

21,185

   Inventory - finished goods

999

  

1,956

   Prepaid expenses and other current assets

725

  

688

   Deferred income taxes, current

                    907

  

                       1,783

Total current assets

45,280

  

40,865
       

Equipment and leasehold improvements, net

509

  

434

Other assets

2,618

  

453

Deferred income taxes, net of current

                 2,704

  

                      2,516
       

Total assets

      $        51,111

  

            $       44,268
 
 
  
 
       

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

      

   Accounts payable and accrued expenses

$         30,834

  

$         25,751

   Dividend payable

                        -

  

                          519

Total current liabilities

              30,834

  

                     26,270
       

Other liabilities

                     56

  

                              -

Total liabilities

30,890

  

26,270
       

Commitments and contingencies

      
       

Stockholders' equity

      

   Common stock, $.01 par value; authorized,
       10,000,000 shares; issued 5,284,500 shares


53

  


53

   Additional paid-in capital

29,272

  

30,948

   Treasury stock, at cost, 749,190 shares and
        1,289,665 shares, respectively


(2,047)

  


(3,620)

   Accumulated deficit

(7,339)

  

(9,570)

   Accumulated other comprehensive income

                   282

  

                          187

Total stockholders' equity

               20,221

  

                     17,998

Total liabilities and stockholders' equity

     $       51,111

  

           $        44,268
 
 
  
 

WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share data)

 

Nine months ended
 September 30,

  

Three months ended September 30,
 

2006

  

2005

  

2006

  

2005
               

Net sales

$  125,479

  

$     95,692

  

$ 48,679

  

$    35,471
               

Cost of sales

        113,196

  

              85,016

  

        44,299

  

          31,594
               

Gross profit

12,283

  

10,676

  

4,380

  

3,877
               

Selling, general and administrative expenses

            8,999

  

                9,064

  

          3,109

  

             2,956
               

Income from operations

3,284

  

1,612

  

1,271

  

921
               

Interest income, net

501

  

218

  

222

  

79
               

Realized foreign exchange gain (loss)

                   2

  

                  (14)

  

                 1

  

                  10
               

Income before income tax provision

3,787

  

1,816

  

1,494

  

1,010
               

Provision for income taxes

             1,556

  

                    728

  

              635

  

                407
               

Net income

     $      2,231

  

        $       1,088

  

      $      859

  

     $         603
 
 
  
 
  
 
  
 

Net income per common share - Basic

     $        0.54

  

        $         0.27

  

      $     0.20

  

     $        0.15
 
 
  
 
  
 
  
 

Net income per common share - Diluted

     $        0.50

  

        $         0.25

  

      $     0.19

  

     $        0.14
 
 
  
 
  
 
  
 

Weighted average common shares outstanding-Basic

             4,162

  

                 3,969

  

           4,213

  

             3,994
 
 
  
 
  
 
  
 

Weighted average common shares outstanding-Diluted

             4,495

  

                 4,391

  

           4,548

  

             4,339
 
 
  
 
  
 
  
 

Reconciliation to comprehensive income:

              
               

Net income

$      2,231

  

$        1,088

  

$      859

  

$          603

  Other comprehensive income, net of tax:

              

      Unrealized gain on marketable securities

21

  

14

  

6

  

8

      Foreign currency translation adjustments

                  74

  

                      22

  

                16

  

                  55

  Total comprehensive income

     $      2,326

  

       $        1,124

  

      $      881

  

   $        666