Good day, ladies and gentlemen, and welcome to your Omni-Lite Industries 2nd quarter investor 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 0 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 yours.
Good morning, and thank you for joining us. With me today is our Chief Executive Officer, Dave Robbins. Our call is being recorded and will be available for playback, the details of which are in our press release issued yesterday. The purpose of this call is to provide an update on Omni-Lite's financial performance and operations as we file our second quarter and year-to-date 2023 results yesterday morning, August second. After our remarks, we will open the line for any Q&A.
If you have not received a copy of our press release, which was issued yesterday, you can find it on our website at www.omni-lite.com or email us at d.robbins@omni-lite.com or a.vetrano-palmer@omni-lite.com to request a copy. Before we get started, I would like to remind you that today's discussion will or may include forward-looking statements, including information regarding Omni-Lite'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 risks and uncertainties that could cause our actual results or performance to differ materially. We are also mindful of the risks and impacts and changes in the health of the general economy, including the effects of the current U.S. financial market and U.S. global commercial aerospace markets and 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 Omni-Lite's SEDAR filings.
The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. I'd also like to mention that in addition to recorded financial results in accordance to International Financial Reporting Standards or IFRS, during our call, we may also discuss or reference some non-IFRS financial measures, specifically adjusted EBITDA and its free cash flow.
A reconciliation of these non-IFRS metrics is available and included in our applicable SEDAR filings and press release. Lastly, unless noted, any reference or discussion of our financial results or metrics is in US dollars. I'd like to now turn the call over to Dave. Dave?
Thanks, Amy. Good morning, everyone, and thanks for joining us. I'd like to make a few comments about our Second quarter 2023 performance and following comments on our current business. Second quarter 2023 revenue of $3 million marks an increase of 24% year-over-year Second quarter 2022, and 12% up sequentially from First quarter 2023. Growth in the quarter was driven by a combination of increases in commercial air transport fastener products and defense electronics.
Adjusted EBITDA for the Second quarter 2023 was $168 thousand, which is a continuation of its positive trajectory and an indication of our ongoing improvements in product production efficiency, managing costs, and product pricing. Further improvements will come from more efficient production of casting products, especially in aerospace and defense platform products.
Bookings for the second quarter increased to CAD 3.5 million, up sequentially from CAD 3.2 million Q1 2023 and up year-over-year CAD 3.4 million Q2 2022. Backlog at quarter end was a strong CAD 4.7 million and expect the majority of the backlog to ship in 2023. Commercial air, aerospace fastener demand and defense aerospace fasteners and electronics demand continues to drive the growth in revenue for 2023 and points towards continuation for the second half of 2023.
Demand is growing for commercial aerospace engine casting components, evidenced by backlog into 2024 and development orders for new casting components. A new structural fastener and an automotive engine component and airborne sensor castings are in qualification phase with the expectation of pre-production and production heading into 2024. With that, I'd like to turn the call back over to Amy. Amy?
Thanks, Dave. Dave has addressed our revenue and EBITDA outlook, I will just make a few comments regarding our cash. Adjusted free cash flow as defined as cash flow from operations minus capital expenditures was a source of cash of approximately $162,000 as compared to a use of cash of $555,000 in 2022. An improvement of approximately $717,000.
We did use approximately $41,000 for CapEx improvement purchases in our manufacturing processes. We are continuing to see an increase within our WIP and finished goods, indicating a movement of our backlog. We did finish the quarter again with $1.3 million in cash and no debt, which is consistent with both how we ended Q1 2023 and the year of 2022. We continue to maintain a strong cash balance. This does complete our prepared remarks, and we would like to open the call up now for questions.
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. Again, that's star 1 if you do have a question or comment. Please hold as we poll for questions. We'll take our first question from Manny Kramer. Please go ahead, Manny.
Yeah, thanks for a good quarter. Just wondering about how is the tax situation? Do you have any tax losses carry forward, or does it affect hopefully we're gonna be profitable from now on with this tax situation?
We do have some cash tax carry forward from prior years.
Thank you.
Thank you. We'll take our next question from Frank Wisneski. Please go ahead, Frank.
Hi, Dave and Amy. Couple questions. You obviously are still optimistic on the casting side, but it doesn't look like there's been much progress to date. It looks pretty much flat, year-over-year. Could you go into a little more, give me a little more color on why you're so optimistic for the second half of the year? Relatedly, I assume that a lot of the inventory increase and the order increase must be coming from the casting operations if you're that optimistic. Thanks.
Yeah. Well, yeah, I think the two good reasons why it's pretty optimistic, you know, one is that there's evidence that on parts that are produced now that are on current platforms, especially into the aerospace and defense area, are have the same kind of profit profile that the rest of the company is at, whether it's electronics or forging. That's number 1. Number 2 is there still is a mix issue where, you know, we've got a lot of development products going on right now, so there's still a bit of product rationalization going on.
You know, since we've been, you know, looking to more focus on the, you know, higher margin aerospace and defense products and to a lesser extent, some of the maybe other commercial or programs that don't have that profile. That's, you know, that mix is still happening, and we're in development. Development, you don't have as much contribution in the development phase. That's why I mentioned that there are several that are still in development, but now there's been one that is in qual phase. Those are the reasons that optimistic about the future.
That's specifically on the casting side?
Yes, specifically on the casting. Now there's some on, there's some forge, you know, that automotive form part that is in qual too. Yeah, that's part of, you know, the whole process when aerospace and defense, you should go through that qual process. You have to go through that qual process. Specifically in casting, yes.
Yeah. Is the automotive line that you mentioned, that's casting also?
No, no, that one actually is a formed part .
Yeah. It's, yeah. Okay.
Well, it's been a small but a very steady part of the forming business. It's a very specialty area in automotive. You know, it's, you know, aerospace and defense dominates that, but there is a niche there and pretty excited about that opportunity too, so yeah.
Great. your SG&A, CAD 400,000 a quarter, is that pretty much the go forward run rate?
Yeah. We are expecting SG&A to stay in line, you know, quarter-over-quarter. We shouldn't see any, you know, major spikes in either direction.
Okay. How about the same question for research. You're double those expenditures. Is that I assume that's because of the new qualification, new products?
It-
Does research continue to?
Yeah
look that much?
Yeah. Because we've got so much going on, with these new products, more is going into research.
Okay
that will come down, you know, a bit, but as new products come on, you know. That's gonna come in flows depending on what's going on for new product lines. Yes, that is why it is up, you know, pretty significantly this quarter.
Yeah. You know, I noticed that, and I hadn't seen this before, and maybe I just missed it, but there's about a million and a half shares that were held in escrow for the casting operation, and they released, I guess, at the end of this year. What, those aren't performance, those are just pure collateral shares. They're not performance related, are they?
Yeah, not performance, just ordinary course, in the way, the way the deal was structured. There's no per-- that was not per-- based on any performance.
Okay. We're good. Okay. One final one. You did mention California Nanotechnologies Corp., which obviously the price increase there had a pretty good impact on your earnings. What are you planning for that investment that you have? It's a pretty big part of your total market capitalization now.
Well, our posture's been to support, you know. We're, you know, we have a lot at stake, and we're supporting certainly in any way we can without distracting from our business, support their efforts. We'll continue to look at it. I mean, it's something we anticipated that there would be improvements from, let's say, you know, two years ago. It is good to see that they've made improvements and we like the trajectory that they're on too.
They're still current on their payments to you?
They are, yep.
Okay. Whether those reserves will be reversed, I guess we'll wait until the end of the year, the year end to come?
Yeah. We looked at it at the end of 2022. There wasn't enough, you know, there to say that we were ready to reverse that reserve. We will look at it on an annual basis. Really, you know, we would need to see some pretty significant, you know, payments ahead, significant EBITDA coming out of them, significant cash flow to prove that, you know, they are gonna be able to pay that within a given time.
We will look at it annually. I'm not sure if it'll specifically change this year, you know, it will be a good show to have a full, you know, year and a half of payments that have been on time, timely, you know, nothing being missed. It's just gonna be something we continue to watch.
All right. That is an all or nothing thing, right? I mean, it's not like you can you know, re-reverse one half of the write-off.
Yeah.
100%? Yeah.
I tried to push, you know, a small portion of it through the last year and was said, you know, all or nothing, we can't just do a portion.
I understand. Good. Thank you very much.
Once again, that's star one if you do have a question or comment.
[Break]
There appear to be no further questions at this time. 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.