This performance is particularly noteworthy as it comes to strong results in respective prior periods. In 2023, net sales totaled $139.3 million, up nearly 4% from the prior year. Nortech’s full year 2023 net sales performance was driven by growth in all three of our major industry categories, medical, aerospace and defense, as well as industrial. For the year, the medical market was up by $2.8 million or 3.7%, as compared with 2022, with the majority of the increase coming from medical component products. For the year, net sales from the aerospace and defense category totaled $20.5 million, a 5.1% increase from the prior year. And net sales from Nortech’s industrial category were $40.1 million, up $3.6 million from the prior year. Included in the financial performance for the full year 2023, gross profit was $23.1 million or 16.6% compared with gross profit of $20.5 million or 15.3% in the prior year.
Operating expenses totaled $17.2 million, a 3.4% increase from 2022 operating expense of $16.6 million. The $559,000 increase in year-over-year operating expense was driven primarily by $929,000 increase in general and administrative expenses, as we incurred merit wage increases plus investments in our back office infrastructure to create efficiencies. This was offset by $121,000 reduction in 2023 selling expenses and $264,000 decrease in product research and development costs. Despite the decline in year-over-year R&D expenses, we believe that, this level of investment is sufficient to support new RDX technologies. Based on our historical continued and consistent profitability over the past several years and our forecast of future performance, fourth quarter 2023 GAAP net income, including non-cash income tax benefit of $2.6 million related to the reversal of a previously established deferred income tax valuation allowance.
As a result of our performance in the fourth quarter and the non-cash income tax benefit, net income in 2023 totaled $6.9 million or $2.38 per diluted share compared with $2 million or $0.70 per diluted share in 2022. Adjusted for the non-cash income tax benefit, net income would have totaled $4.3 million or $1.48 per share, more than double the level of net income in 2022. As noted in our press release distributed this afternoon, we are using earnings before interest, tax, depreciation and amortization or EBITDA as a key performance in the care to manage our business. In the press release, we have provided a reconciliation of our financial performance determined in accordance with GAAP and EBITDA. For the year ended December 31, 2023, EBITDA increased 38.2% to $8 million, compared with $5.8 million for 2022.
This increase is largely due to increased sales. Moving to the balance sheet and cash flow statement. First, for the year ended December 31, 2023, net cash provided by operating activities totaled $1.8 million. During the fourth quarter, as a result of the previously outlined normalization in the slowdown in customer demand, inventory levels of $21.7 million were materially unchanged from the prior quarter and down from $22.4 million as of December 31, 2022. Receivables as of December 31, 2023 were $19.7 million, up from receivables of $16 million as of December 31, 2022. This is in line with our strong fourth quarter sales and the timing of customer payments. Our contract asset, which represents revenue earned but not yet billed to customers, increased to $14.5 million, as of December 31, 2023, as compared with $10 million at the end of 2022.
This increase reflects the timing of customer shipments and the strong fourth quarter net sales. As a reminder, the majority of our net sales are generated from products contractually manufactured specifically to a customer’s unique application, and as such, we recognize revenue in accordance with U.S. GAAP as we produce these products. We ended the fourth quarter with $9.4 million of borrowing capacity on our line of credit. We have recently replaced our asset-backed line of credit with a cash flow backed $15 million senior secured revolving line of credit, which will expire at the end of February 2027. The new revolver allows for borrowings at a defined rate or at one, three or six months secured overnight finance rate or SOFR plus a defined margin.
We believe that over time, this arrangement will be more beneficial to Nortech and provide greater flexibility in supporting our ongoing operations. Our evolution to our cash flow credit facility is a result of Nortech’s focus on strengthening of its balance sheet and delivering sustained EBITDA growth. For a more detailed explanation of this new agreement, please see our explanation in the 2023 10-K. As of December 31, 2023, cash and cash equivalents totaled $1.7 million, up from $1.1 million at the end of the prior quarter and down from $2.5 million at the end of the prior year. The fluctuation in cash balances reflects timing of cash receipts, expenditures combined with the timing of line of credit borrowings and repayments. On a final note, our top financial priorities for 2024 remain unchanged.
First, we are extremely focused on continuing to strengthen our balance sheet. Next, we will take further advantage of opportunities to align our operations and infrastructure with market demand that we are seeing to deliver sustainable EBITDA growth as well as driving improvements in free cash flow. Our confidence results from growing momentum as we saw in 2023, coupled with disciplined lean operations, execution, expense management and R&D innovation, we believe Nortech can deliver on our objectives. With that, I will turn it back over to Jay for his closing remarks. Jay?
Jay Miller: Thanks, Andy. Before we open the call to your questions, I’m going to touch on three related areas that together serve our customers and help advance Nortech’s corporate stewardship: our engineering expertise, product innovation and sustainability plans. For engineering expertise, we have a dedicated engineering services team that is focused on enhancing manufacturability and serviceability, supply chain risk mitigation and cost efficiency for our customers. Earlier in this call, I mentioned the benefits of our three tier cost structure across the U.S., Mexico and China, and how we can quickly adapt our global resources to fit our customers’ changing needs. Nortech’s engineering capabilities also further our research and development activities with advancements like the expanded Beam Xtreme fiber optic technology or EBX that we announced in January.
