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Operator
Good day, ladies and gentlemen, and welcome to your OmniLight year-end December 31st, 2022 investor conference call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Amy Vetrano Palmer, CFO. Ma'am? The floor is all yours.
Amy Vetrano Palmer
Thank you so much. Good morning, and thank you for joining us. With me today is Chief Executive Officer Dave Robbins. Our call is being recorded and will be available for playback, the details of which are contained in our press release issued yesterday, April 20th. The purpose of this call is to provide an update of OmniLight's financial performance and operations, as we filed our total year 2022 results yesterday morning. Our remarks will be open for the line for question and answer after the call. If you have not received a copy of our press release, which was issued yesterday morning, you can find it on our website, www.omni-light.com. or email us at d.robbins at OmniLight.com or avitrano-palmer at Omni-Light.com to request a copy. Before we get going, I would like to remind you that today's discussion will or may include forward-looking statements, including information regarding OmniLight's performance based on our views of the company's business, the environments in which they operate, our future plans, objectives, business prospects, and anticipated financial performance. These forward-looking statements are subject to future risk and uncertainties that could cause our actual results or performance to differ materially. We are also mindful of the risks and impacts and change in the health of the general economy, including the effects of COVID-19, U.S. global commercial aerospace markets, the U.S. Department of Defense budgets. All forward-looking statements should be considered in conjunction with the cautionary statements contained in our press release and the risk factors included in OmniLite CDAR filings. The company disclaims any obligation to update any forward-looking statement that may be discussed during this call. I'd also like to mention that in addition to reporting financial results in accordance with International Financial Reporting Standards, or IFRS, during our call, we may discuss or reference non-IFRS financial measures, specifically adjusted EBITDA, pro forma adjusted EBITDA, free cash flow, and adjusted cash flow. A reconciliation of these non-IFRS metrics is available and included, if applicable, in our CDAR filings and press release. Lastly, unless noted otherwise, any reference or discussion in our financial metrics are in U.S. dollars. I would now like to turn the call over to Dave Dave?
Dave Robbins
Thanks, Amy. Good morning, everyone, and thanks for joining us. I'd like to make a few comments about our fourth quarter and full year 2022 performance and provide some preliminary remarks on our first quarter 2023 results, following comments on current business. We ended the busy 2022 year at $11.1 million in revenue, up 93% from our 2021 revenue mark, and ended the year with a strong fourth quarter sales. Our fourth quarter revenue of 3.1 million, up 83% year over year, and consistent with Q3 2022, reflects increasing commercial aerospace and defense electronics. Our ending backlog of 3.7 million represents another strong quarter with increases in casting products for both new industrial products and core aerospace engine components. The 2.9 million in year-end bookings was consistent with Q3 2022, and included new titanium, aerospace forging, and new industrial casting products. From a revenue and bookings perspective, Q4 results were directly in line with our organic growth targets, and that's based on the composition of mature product increases and new product starts, which is a good barometer for us. From a profitability point of view, our Q4 results were not representative of our profitability targets, but a reflection of our investment in business improvement initiatives in castings and new product engineering in castings and titanium forging. The business systems deployed in castings operations have driven positive product rationalization and supporting the high demand for precision castings in current and anticipated future environments. If you look at the first quarter of 2023, revenue is 2.7 million, which represents a 13% increase year over year and another $3.2 million in bookings, leaving the Q1 2023 backlog over $4.1 million. Underlying this revenue in bookings activity has been nearly a 50% increase in revenue quoting on a year-over-year basis, which is an indicator of pointing towards continued growth. Drivers for this business activity is a combination of growing demand for our precision aerospace metal components and highly integrated defense electronics, and our specialized industrial forging and castings across the board. So with that, I'd like to turn the call back over to Amy. Amy?
Amy Vetrano Palmer
Thanks, Dave. Dave has addressed revenue and adjusted EBITDA, so I'll make a few comments regarding cash. Adjusted free cash flow, which is defined as cash flow from operations minus capital expenditures, included approximately $29,000 of a one-time DP cash-related transaction expense, as well as a one-time capital gains tax payment of approximately $560,000, which was associated to the sale of the Tritos facility, which took place in 2021. When adjusted for those amounts, the adjusted free cash flow for the end of the year was a use of approximately $639,000, as compared to a use of cash of $461,000 in 2021. We finished the year strong with a source of cash in the fourth quarter of approximately $125,000 in both adjusted and free cash flow. Also noteworthy is we did reduce inventory by approximately $300,000 during the year, bringing our two-year total of almost $750,000. At the end of 2022, we did end with $1.3 million in cash and no debt on the books and we will be closing Q1 2023 still debt free with approximately $1.3 million of cash, indicating we are able to maintain a strong cash balance. This completes our prepared remarks. We would now like to open the call for questions.
Operator
Thank you. Ladies and gentlemen, the floor is now open for questions. If you do have a question, please press star 1 on your telephone keypad at this time. If you're using a speakerphone, we ask that while posing your question, you pick up your handset to provide favorable sound quality. Once again, ladies and gentlemen, if you do have a question or comment, please press star 1 on your telephone keypad at this time. Please hold as we poll for questions. And we'll take our first question from Emmanuel Kramer. Please go ahead.
Emmanuel Kramer
Good morning. Thanks for the quarter. Hopefully we'll do better in the first quarter. My question is as follows. The news items that we hear every day about Ukraine and the Middle East is basically about whoever controls the sky wins. you know, drones, missiles. How are we participating in this, and how does it affect us?
Dave Robbins
So, Manny, we do have, as I've mentioned in previous calls and disclosures, that we do have a pretty good – our defense electronics is supporting a lot of airborne missile defense, you know, both – you know, in theater and wide theater environments. But specifically, we have some defense electronics in the form of some highly integrated and drivers that are, you know, serve the need for very, very small, you know, precision missile systems. So very efficient or in the mobile environment that Ukraine does represent. There's been a broad need for that kind of a system even before Ukraine, but certainly current conditions have furthered that. So our highly integrated defense electronics serve that market pretty well because of the need for size, weight, and power. And some of our increased backlog currently in our defense electronics is for that exact kind of system.
Emmanuel Kramer
There is a mention in the news. about Lockheed Martin and the Department of Defense doing block orders. It means that they're not giving yield. It is spreading out in several years. Does that have any effect on you?
Dave Robbins
We have seen some evidence that we will participate in that. In my comments, I mentioned quoting activity being significantly up. And that phenomenon is part of that. And that quoting activity that we've seen is both in castings, especially actually in castings, and forgings, and electronics, and some big numbers on that quoting activity I do feel is part of that initiative by the Department of Defense to get sort of longer term, bigger contracts and not you know, not these smaller yearly ones. So, yeah, we expect to, you know, benefit from that kind of a buying strategy.
Emmanuel Kramer
Thanks very much.
Operator
Once again, that's Star 1. If you do have a question or comment, and we'll take our next question from Jason Sinensky from Chapter 12. Please go ahead.
Jason Sinensky
Hi, guys. Thanks for taking my question. I was going to ask just on that point around the quoting activity, what the typical lag time would be from when you issue quotes to when we would actually see that in bookings or revenue?
Dave Robbins
That can vary, but typically from the time you have an actual quote to an order – is typically in three to six months. It can be a little quicker. And generally what happens on a new product, which, you know, we're mostly talking about, they start with a relatively small order. So, for example, we may quote, you know, we may quote a start, you know, the product starts, and then also the quote, what an initial production volume may be. So the delay could be three to six from the time you quote it to the booking, although we could book inside of three months that initial engineering release, which dollars-wise may not represent too much. It may be a small percentage of the total that you quoted, but it means you've started. So... And the time that you would book more of a production volume would be more in the nine months range.
Jason Sinensky
Okay.
Dave Robbins
Okay.
Jason Sinensky
That's helpful. And I think in the quarter you talked about there were like $100,000 of startup product costs. I mean, is that sort of a normal part of the business? So like with the increasing quoting activity, would you expect to have some sort of one-time costs over the next, you know, whatever it is, six, nine, 12 months? you know, as you're rolling out these new products?
Dave Robbins
Well, so particularly in Q4, that was a little bit on the high side. Worth noting, I think in the case of the forgings, it was a whole titanium product line series. So there was, you know, maybe a bit more than, you know, there's always some expected startup costs, you know, in the tooling and other associated sort of startup costs. It was a bit more because in this particular case, it was a line of titanium forging. So a little bit more than normal. And in castings, you know, there is, you know, there really, we've seen it, you know, in the demand for, you know, a reliable domestic supplier of castings, you know, both from, you know, new products from our existing customers, but, you know, we have some new industrial partners that are looking for enough volume that, yes, there was a bit more startup costs related to the volume, right? So there's always some, but, you know, that represents a little bit more than normal, right?
Jason Sinensky
Okay. A number of companies in your space are talking about issues with cost inflation or the reliability of the supply chain, I guess, driving margin pressure or revenue issues. I mean, it doesn't seem like you're not talking about that too much. Like, is cost inflation slash supply chain reliability an issue for you guys right now?
Dave Robbins
Well, I have talked about it in Q3 a bit. specifically with wire in forgings, then the supply of wire has impacted our business some. What we've done to mitigate that is to place orders for long-term, for wire ahead of time. We're careful about that because use of capital, but it has helped us mitigate some of that supply chain issue. So we've been affected probably not enough to really mention it other than, you know, in a call like this that has, you know, we're managing it. You know, we're working with it. On the electronics side, we did place orders for long-leave electronics early last year when really supply chain was – was looking like it could have an effect. You know, we placed some long-term orders, and that did, you know, we have made that a little bit of a priority, and it shows up a little bit in our raw material, not in a major way, but that's how we're mitigating, you know, we're mitigating real supply chain issues. And I think in castings, you know, because of the raw materials there, we stay within a fairly defined mix of materials that we buy, we've been able to not have a big impact there either. That's how we're managing it.
Jason Sinensky
The quarter just cost inflation. It sounds like that's not really top of mind for you.
Dave Robbins
We are watching that very carefully and price adjustment is probably the best way to you know, that we can stay on top of it and price adjust. To a small degree, I think, you know, we've had some impact where, you know, you've got backlogged items at a, you know, in our casting operation where, you know, it was priced, you know, before, you know, increases in cobalt, let's say, or stainless steel. And, you know, we've probably taken, you know, a little bit of a hit only because, you know, maybe the timing of that backlog early in the year. But as we've, you know, put business systems in, as we're putting that in, in, in castings, it's, it's allowed us to be, you know, be ahead of that curve a little bit and price it in, you know, price it in as we see it instead of, you know, a lagging, you know, a lagging issue. So it hasn't been enough, hasn't been enough of it to, for us to comment, but, but, But having said that, it has had some effect, but we try to price that in real time to mitigate.
Jason Sinensky
Great. And then maybe just last one for me. It looked like the $3 million line of credit you had with, I think it was City National or RBC, that I guess it's not available or you kind of let it lapse. I guess can you talk about whether there are plans to put in some kind of replacement credit facility and whether you might need access to capital at some point over the next 12 months, even if it's just to fund working capital?
Amy Vetrano Palmer
Yeah, so it did lapse, and that was a planned activity to let that lapse. We do have options available if we were to need a source of cash. We've got contacts available to start that process. We don't envision for any need for 2023 to go to any type of line for working capital or anything, you know, of those sorts. But, you know, we do have relationships with the various different people in case there ever did arise a need, you know, whatever that need may be.
Jason Sinensky
Okay. So like the sort of $1 million or so of cash you have on the balance sheet right now, feels like enough liquidity to sort of operate the business normally.
Amy Vetrano Palmer
Correct, yep.
Dave Robbins
And we had a recent engagement with banks, so we're in good position. We haven't put it in place, but we have that ability quickly.
Jason Sinensky
All right, thanks so much, guys.
Operator
Once again, that's Star 1. If you do have a question or comment. And we'll take another question from Emmanuel Kramer. Please go ahead.
Emmanuel Kramer
Yeah, talking about liquidity, how is CalMano doing with, I know we had an improvement for them paying off the debt. How are they doing on an ongoing basis on that? And also, do you have a date for your first quarter earnings report, please?
Amy Vetrano Palmer
So Cal Nano is doing well. They did pay us, you know, advance $120,000 in the first quarter of 2023, which was a pay ahead of a year's worth of debt payments. And they have stayed on top of interest payments as well every single month. So that has been a good initiative there and very positive to see that they are paying that back. We don't have a date as of yet for Q1. I would think probably towards the middle of May, but we don't have a specific date as of yet.
Emmanuel Kramer
Thank you very much.
Operator
And there appear to be no further questions at this time.
Amy Vetrano Palmer
All right. Well, thank you, everyone, for joining us, and have a great afternoon.
Operator
Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.
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