Ladies and gentlemen, thank you for standing by and welcome to the World Fuel Services fourth quarter and full year 2022 earnings conference call. My name is Gigi and I'll be coordinating the call this evening. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. Instructions on how to ask a question will be given at the beginning of the Q&A session. As a reminder, this conference is being recorded. I would now like to turn the conference over to Mr. Glenn Klevitz, World Fuel's Vice President, Treasurer, and Investor Relations. Mr. Klevitz, you may begin your conference.
Thank you, Gigi. Good evening, everyone, welcome to the World Fuel Services fourth quarter and full year 2022 earnings conference call, which will be presented alongside our live slide presentation. Today's presentation is also available via webcast. To access this webcast or future webcasts, please visit the World Fuel Services website and click on the webcast icon. With us on the call today are Michael Kasbar, Chairman and Chief Executive Officer, and Ira Birns, Executive Vice President and Chief Financial Officer. By now, you should have all received a copy of our earnings release. If not, you can access the release on our website. Before we get started, I would like to review World Fuel's safe harbor statement.
Certain statements made today, including comments about World Fuel's expectations regarding future plans and performance, are forward-looking statements that are subject to a range of uncertainties and risks that could cause World Fuel's actual results to materially differ from the forward-looking information. A description of the risk factors that could cause results to materially differ from these projections can be found in World Fuel's most recent Form 10-K and other reports filed with the Securities and Exchange Commission. World Fuel assumes no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. This presentation also includes certain non-GAAP financial measures as defined in Regulation G. A reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures is included in World Fuel's press release and can be found on its website.
We'll begin with several minutes of prepared remarks, which will then be followed by a question-and-answer period. As with prior conference calls, we ask that members of the media and individual private investors on the line participate in listen-only mode. At this time, I would like to introduce our Chairman and Chief Executive Officer, Michael Kasbar.
Thanks, Glenn and good evening, everyone. I'll start by first thanking our talented global team and our customers, suppliers, and partners who all contributed to an extremely successful outcome for our company in 2022. It was another eventful year and we once again demonstrated our ability to perform well through significant market turbulence. One of the core principles of our strategy has been to build a complementary portfolio of businesses with a common operating model to deliver ratable recurring revenue and returns while preserving capabilities for us to add value during market volatility and supply chain challenges as they emerge in markets from time to time. If the last few years have shown us anything, it is that the world is changing at an accelerated pace where resiliency is a critical element necessary to succeed in an increasingly turbulent world.
For us, 2022 proved to be an extraordinary example of just that. Despite experiencing extreme headwinds in the first half of the year from unprecedented market backwardation, our commercial aviation business delivered solid overall results with volumes closer to pre-pandemic levels as passenger air traffic continued to normalize throughout the year. Our business and general aviation activities, meanwhile, continued to grow and were a significant contributor to our overall results in 2022. A key element of our strategy to grow this business, and all of our businesses, has been to offer a broad array of physical and digital services to create a solutions ecosystem that provides a comprehensive suite of operational and data services that support our customers' complete energy and logistics needs.
One example of that is our closed loop payment processing system, AVCARD, which provides our customers with the access to on-demand fueling options at thousands of locations around the world, whether we are the supplier or not. This is just one example of the many solutions we continue to add to integrate energy supply with operational integrity. Our global marine business had an extraordinary year where our team expertly navigated a volatile and high-priced credit-constrained marketplace, enabling us to deliver record results. A job well done to our global marine team for their invaluable contributions to our outstanding performance. Due to the spot nature of our marine business, we have spent a considerable amount of time over the last decade reorganizing our business to drive internal efficiencies so that it can produce respectable returns in down markets and yet remain poised to provide value in volatile and credit-constrained markets.
The high fuel prices, coupled with rising interest rates experienced through 2022, created an environment where we were able to leverage the scale of our business and the strength of our balance sheet to deliver for our customers and provide them with the products, services, and credit they required when they needed it most. For this, we were rewarded with generating exceptional returns and delivering the highest level of profitability in the history of our marine business. Moving on to our land business, our liquid fuels, natural gas, and power businesses also had a memorable year as we began 2022 by completing the acquisitions of Flyers Energy, significantly increasing the size and scale of our North American commercial and industrial business.
Ira will give more detail on how this business has evolved over time, but we are certainly coming out of 2022 with a much stronger platform that continues to improve the ratability of returns while providing significant growth and opportunities for further efficiency gains ahead. Many thanks to all of the teams across our land businesses in North America, the U.K., and Brazil for their efforts which drove our success over the course of the year. We have also been cultivating an emerging land business adjacent to our aviation physical supply locations and are excited about the overall future trajectory in this area. Our World Kinect sustainability solutions offerings also continued to grow and evolve in 2022. World Kinect is where we are currently making our greatest investment in people to be well-positioned for the growing demand for sustainability solutions.
The volatility, supply chain, and geopolitical challenges experienced in the energy markets this past year showed all of us that in order to successfully provide energy security and decarbonization, we must accelerate the build-out of innovative, low and zero carbon decentralized energy sources alongside conventional. We believe that we are uniquely positioned to leverage our expertise in global logistics, distribution, and finance to deliver on these imperatives for our customers and suppliers to make sensible energy security and decarbonization goals a reality. We already offer our customers a comprehensive global portfolio of sustainability-related products and services, and we'll continue to invest organically and through acquisitions in this important and natural extension to our existing businesses. We recently established World Kinect Sustainability Ventures to invest in early-stage and startup companies in support of the development of future fuels and technologies.
As an example, we recently made an equity investment in Meld Energy, a European developer of green hydrogen projects, to support the transportation industry and other hard-to-abate sectors looking for alternative sources of lower carbon energy like ammonia, e-methanol, and sustainable aviation fuel, also known as SAF. This investment is an outcome of our efforts to collaborate with others to develop the supply chain necessary to enable these renewable energy sources to become a commercially viable reality in the medium term. Our business performed very well in 2022, and our balance sheet remains strong. We are focused on providing conventional, sustainable, and digital solutions to the aviation, marine, and land-based commercial, transportation, and governmental entities in the U.S. and worldwide.
While our quarter-to-quarter results may be buffeted by the ebbs and flows of the crazy world we seem to live in now, we are confident that our trajectory over the next few years is well-focused on leveraging our platform to create operating efficiencies and drive growth with a solid return. I'd like to now turn the call over to Ira, who will share in greater detail our fourth quarter and full year performance.
Thank you, Mike. Before I walk through our fourth quarter and full year results, please note the following figures exclude the impact of certain non-operational items which are highlighted in our earnings release. These items principally consist of a non-operating legal settlement and a loss related to our estimated earn-out arising from the sale of Multi Service in 2020. These items, however, result in approximately $26 million of related cash inflows during the first half of this year, $20 million of which was already received during the first quarter. To assist you in reconciling the results published in our earnings release, the breakdown of the non-operational items can be found on our website and on the last slide of today's webcast presentation. Now on to the financial highlights.
Consolidated revenue for the full year was a record $59 billion, up $28 billion or 88% year-over-year, related to the increase in average fuel prices as well as volume increases across all of our business segments compared to 2021. Adjusted fourth quarter net income and earnings per share were $33.5 million and $0.54 per share, respectively, up by $16 million and $0.26 per share compared to the fourth quarter of 2021. Adjusted full year net income and earnings per share were $128 million and $2.04 per share, respectively, both increasing nearly 50% from prior year results. Adjusted EBITDA for the fourth quarter was $107 million. That's an increase of $51 million or 93% compared to the fourth quarter of 2021.
For the full year, Adjusted EBITDA was $380 million, up $142 million or 60% compared to 2021. Consolidated volume again increased principally related to our aviation segment continuing to bounce back from pandemic lows and the addition of the Flyers Energy business at the beginning of 2022, with fourth quarter and full year consolidated volume of 4.6 billion and 18.3 billion gallons or gallon equivalents, representing year-over-year increases of 5% and 15% respectively. In terms of segment volumes, fourth quarter volume in our aviation segment was 1.8 billion gallons. That's an increase of 7% compared to the fourth quarter of 2021. The volume increase in the fourth quarter was principally driven by a further recovery of commercial passenger travel, primarily in Europe.
Full year aviation volume was 7.1 billion gallons, an increase of 22% year-over-year as a result of the significant recovery from the pandemic-driven lows of the last couple of years. Where 2021 only experienced a partial recovery due to ongoing travel restrictions in Europe and Asia, 2022 constituted a year of more meaningful demand recovery in Europe and other parts of the world, with Asia still lagging. Volume in our marine segment for the fourth quarter was 4.7 million metric tons, a slight decrease of 4% year-over-year. However, marine volume for the full year was 19.1 million metric tons. That's a 3% increase year-over-year.
As I will review shortly, while volume growth was modest, marine had a fabulous year, driven by higher average margins, due in part to elevated prices and increased interest rates, along with related credit constraints in the marine marketplace compared to 2021. Lastly, our land segment volume was 1.5 billion gallons or gallon equivalents in the fourth quarter, and 6.2 billion gallons for the full year, an increase of 12% and 17% respectively. Both the fourth quarter and full year volume increases were principally driven by Flyers. Consolidated gross profit for the fourth quarter was $282 million, that's a 31% year-over-year increase, and full year gross profit was $1.1 billion, up $300 million or 38% year-over-year.
Our aviation segment contributed $111 million of gross profit in the fourth quarter, a slight increase compared to the results in the fourth quarter of last year. For the full year, aviation gross profit was $357 million, a decrease of 8% compared to 2021, principally associated with the negative impact of the steeply backwardated market in the first half of this year or last year, as well as the reduction of government-related activity as a result of the troop withdrawal from Afghanistan in the summer of 2021, partially offset by a significant rebound in domestic and international commercial passenger activity.
While we frequently talk about a commercial aviation business, it is important to note that we also had a very strong year in business and general aviation activities, servicing corporate fleets and private jets, with gross profit in that area increasing 26% from 2021, benefiting from increased fueling activity, but also from continued growth in related service offerings, which Mike mentioned earlier. While the UVair acquisition, which we closed just before the onset of the pandemic, had a slow start for obvious reasons, it was successfully integrated very quickly and is now making very healthy contributions to our broader business and general aviation results. In the first quarter, while we expect to experience a seasonal sequential decline in aviation gross profit, year-over-year gross profit should be higher than the first quarter of 2022, when we began experiencing the impact of market backwardation.
For the full year, aviation should rebound substantially, again, due principally to the broader backwardation-related pricing impacts experienced in the first half of 2022. The marine segment generated fourth quarter gross profit of $56 million. That's an 85% year-over-year increase, once again driven by the market dynamics I described earlier. For the full year, marine gross profit was a record $256 million, an increase of $156 million or 155% year-over-year. The marine team did a remarkable job servicing our customers and managing risk amidst a very challenging macro environment with significant market volatility. While the market remains challenging, we expect marine first quarter gross profit to be up modestly year-over-year, driven in part by the continued higher interest rate and credit-constrained macro environment.
However, for the full year, we expect marine results to be meaningfully lower than the extraordinary results produced in 2022, considering the significant reduction in fuel prices and volatility from prior year highs. Our land segment delivered gross profit of $116 million in the fourth quarter. That's a 54% year-over-year increase. In addition to the significant impact from the Flyers acquisition, which performed extremely well throughout the year, our broader North American business also performed well, as did our European power business within World Kinect, which benefited in part from the heightened level of volatility in Europe. Finally, our sustainability business also grew year-over-year. We are continuing to invest in talent in this part of the business, which has helped accelerate growth in this strategic area for us. For the full year, land delivered $476 million of gross profit.
That's a 58% year-over-year increase, now representing 44% of consolidated gross profit for the company, demonstrating the growing significance of our ground-based conventional fuels business and our sustainability-related product and service offerings. Over the years, we have continued sharpening our focus in our land segment. While there is still more work to be done, the recent investments that we have made in this segment have truly changed the landscape of this part of our business. With our 2022 results reflecting full-year Flyers results, as you can see on the webcast slide, total North American commercial and industrial gross profit derived from gasoline, diesel, and lubricant sales, including our cardlock activity at nearly 450 network sites across the U.S., increased from 20% in 2021 to 47% in 2022.
When adding our distribution of fuel to more than 3,000 retail convenience store customers across the U.S., generally under long-term contracts, the aggregate contribution to gross profit was 62%. This is evidence that our current distribution of land volume and related profitability is now more ratable than ever, generating higher unit margins and creating greater scale while remaining our lowest risk business. While we already experienced higher overall land operating margins in 2022, with this increased scale, we now have broader opportunities to further increase operating efficiencies over time. I will share more details here shortly. Beyond our traditional liquid fuels business, we have also continued to grow our natural gas and power fulfillment and brokerage activities, as well as our sustainability consulting and other renewable energy solutions through World Kinect, which combined represented more than 20% of land segment gross profit in 2022.
As Mike mentioned, we remain excited about the expanding growth opportunities across our core land fuels business as well as everything that we're doing within World Kinect. For the first quarter, we anticipate land gross profit to be flat to up modestly compared to the results posted in the first quarter of 2022, when we benefited significantly from near record performance in our U.K. land business. For the full year, 2023, we remain focused on driving further year-over-year improvement in gross profit by capitalizing on organic and inorganic growth opportunities and identifying greater efficiencies in our North American land fuels business while also accelerating growth in our sustainability-related business activities. Total operating expenses, including bad debt expense, were $202 million in the fourth quarter, in line with our expectations at the beginning of the quarter.
For the full year, our operating efficiency improved meaningfully with our operating income as a percentage of gross profit, increasing more than 500 basis points from 2021 to 25.3%, benefiting from the significant operating leverage that exists in marine when market conditions are favorable as well as Flyers. While we made significant progress in 2022, we are continuing to focus on driving cost-efficient growth, aggressively managing expenses, and making synergistic investments. As a result of these efforts, we are establishing an operating margin target of 30% or more by 2025. Looking ahead to the first quarter, we expect our operating expenses will be similar to the fourth quarter in the range of $200 million-$205 million. Again, this estimate includes bad debt expense.
Adjusted EBITDA for the fourth quarter was $107 million, an increase of 93% compared to last year's fourth quarter. For the full year, our Adjusted EBITDA was $380 million. That's a $142 million or 60% year-over-year increase and now represents a level similar to our strong pre-pandemic performance in 2019, again, driven by record marine results, strong core commercial and business and general aviation results, and solid performance in our North American land business, including Flyers. Fourth quarter interest expense was $36 million, in line with our guidance on last quarter's call. Our interest expense remains higher than prior years due to the impact of higher average fuel prices on our working capital requirements, as well as higher average funding costs driven by the rising interest rate environment.
To be clear, interest expense is principally comprised of borrowing costs related to our revolving credit facility and term loan, as well as fees associated with our receivable sales activity, which comprised approximately 40% of our overall interest expense for the fourth quarter and full year. As discussed on last quarter's call, we remain focused on numerous opportunities to mitigate the impact of further interest rate hikes, some already actioned, and others work in progress. Based on what we know today, our consolidated interest expense for the first quarter should be flat to modestly down sequentially, but up significantly from the first quarter of 2022, when interest rates were still materially lower.
For the full year, interest expense is currently expected to exceed 2022 by approximately 15%-20%, principally related to the first quarter as interest rates had already increased by the second quarter of 2022. On to taxes, our adjusted effective tax rate for the fourth quarter was 22% compared to 25% in the fourth quarter of 2021. For the full year, our adjusted effective tax rate was 20%, down significantly from 26% in 2021. This is related to our continued efforts to drive greater tax efficiencies across our global business and the benefit from certain discrete items. For 2023, we believe our full year tax rate will remain generally consistent with 2022.
However, I would like to be clear in indicating that our quarterly rates could vary significantly as they did in 2022 and remain highly dependent on the timing and mix of global earnings and the accomplishments of key objectives in 2023 affecting our tax rate. During the fourth quarter, operating cash flow was negative $91 million. Despite the negative operating cash flow in the fourth quarter and the negative cash impact of backwardation on our aviation results in the first half of 2022, we did generate $138 million of operating cash flow for the year. Considering the current interest rate environment, we are focused on driving an even better result for 2023 which would be both positive to liquidity and returns, but also beneficial to interest expense.
Also, during 2022, we repurchased approximately $50 million of our common stock and increased our quarterly dividend by 17%, returning nearly $80 million of capital to our shareholders, demonstrating our continued commitment to drive additional shareholder value through buybacks and dividends. In closing, we had a strong year, which began with the strategic acquisition of Flyers, which had a phenomenal year, significantly exceeding our initial expectations and materially increasing the size, scale, and geographic breadth of our North American liquid fuels business. Marine simply had a phenomenal year, delivering gross profit two and a half times the level produced in 2021, while navigating a higher fuel price and credit constrained environment.
While aviation was hampered by the impact of steep market backwardation in commercial aviation in the first half of last year, they experienced strong volume growth, and we also experienced a significant increase in profitability in our business and general aviation business fuel and service offerings. We generated, again, $380 million of Adjusted EBITDA approaching pre-pandemic levels, despite the sale of Multi-Service in 2020 and the discontinuation of government-related activity in Afghanistan in 2021. In terms of M&A, while the current interest rate environment has added a layer of complexity here, our liquidity profile remains strong and our pipeline of opportunities remains significant. We will continue our disciplined approach to M&A, focusing on identifying accretive and leverageable opportunities that complement our conventional fuel businesses, digital offerings, and sustainability-related activities.
Our team is very proud of what we accomplished in 2022, and we're equally proud of our team for what they've accomplished. We are confident that our continued focus on driving further improvement in operating efficiencies and an increasing suite of strategic growth opportunities will result in accelerated growth over the next few years. We look forward to sharing our progress with you going forward. I would now like to turn the call over to our wonderful operator, Gigi, to open the Q&A session. Gigi?
Thank you. At this time, I would like to remind everyone, if you would like to ask a question, please press star one one on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. If you are using a speakerphone, please lift your handset before entering your request. We will pause for just a moment to compile the Q&A roster. Our first question comes from the line of Ken Hoexter from Bank of America.
Hey, good afternoon. It's Ken Hoexter from BofA. Ira, I just wanna try and put together the, hopefully you can hear me, the 2023 outlook. It sounded like you've got some pressure on marine. I don't know if aviation will rebound in Asia. That helps out. Maybe just walk us through and do you expect then to see any growth in 2023 or was that caution, A, we're coming off record levels. We expect a little bit of down given a recessionary environment. Kind of just sum it all up for us.
Well, first of all, Ken, we're happy that you're supporting the cruise side of our business today. Because of that, we didn't hear you that well, but I think I got the question. I'll try to answer it as best I can. If you piece things together, you know, aviation obviously had a significant impact from the backwardation story in the first half of last year. When you look at 2023, we expect a significant rebound from that alone because we don't expect, you know, that situation to reoccur. While we do expect some growth in addition to that element of the rebound, we're also being, you know, very careful in making sure, we're going after the right growth, you know, in this interest rate environment.
But, you know, we are looking to try to grow the business a bit beyond the backwardation-related rebound. So aviation in a nutshell, will be up significantly, or, you know, I guess I should always say, should be up significantly. When you look at marine, you had for many months of the year, you had bunker fuel prices hanging around the $1,000 per ton level and there was a tremendous amount of market volatility. So we just had a phenomenal, you know, record year in marine last year, which is very difficult to replicate. We expect that we'll still have a very good year this year. The team's doing a great job.
We're also being, you know, mindful of risk and managing that element of the business as well as we typically do. But even saying that, you know, marine will be down from, you know, the highs of 2023 unless something materially changes in the marketplace over the next 10 months. To put it in scale, those pluses and minuses are fairly similar, right? So the, you know, the aviation increase and the marine decrease for the reasons I described are relatively similar within, you know, dealt several million dollars. Land, which obviously benefited from Flyers, we now have a much stronger base going into 2023. There are certainly some opportunities for growth there, so we should see, you know, a bit of improvement in the land business.
When you put everything together net net, you know, we have some improvement, but we got some material ups and downs related to aviation and marine. I think that addressed.
You know, generally address your question on the operating side of the business.
Yep. Yep. Great. That's a great run through. Also you can hear me, so if you can, I'll try and run through. I've got just a couple I'll throw your way, maybe you can hear it. Working capital seemed to be a draw this quarter. Can you walk us through what the impacts there were? You know, we didn't see any buybacks. Is that something because of the change in price of fuel? Is that seasonality? You know, maybe talk through that. Then my second one is just with given the land shift, thank you for the chart, that it's a great to finally see what all the makeup is, because I know we've asked that so many times on the call.
Does that mean we should seasonally see it flatter? Obviously U.K. becomes a smaller part of that, so should that just be less seasonally impactful and maybe just greater contribution going forward as a whole unit?
Yeah, let me, let me answer, you know, each of your questions. Again, you're breaking up, but I think we heard you well enough. In terms of, I think your first question related to the use of cash, in the fourth quarter. We did, you know, we did a really good job as usual, managing cash flow during the quarter. There are elements that are timing related, but on the, on the side of our business, which are derivative related, there are also timing issues on cash flows associated with the, with the margin positions that we may hold with various institutions. And in the fourth quarter that we had a net outflow mostly related to activity in Europe.
You know, we're hoping that, you know, that turns itself around and we're hoping to generate a better full year result in 2023 as compared to 2022. In terms of the seasonality in land, you're right, because U.K. has now become, as you can see on that chart that we had in the webcast, a much smaller piece of the pie, you know, the seasonality has been muted a bit because adding in Flyers has strong seasonality when we used to be weak in land. It's balanced things out a bit, you know, a bit more so, you're probably looking at, you know, Q2 and Q3 being the stronger quarters, you know, give or take for land, but not, you know, not materially different.
You now have a relatively ratable mix of business when you put it all together, where we used to peak in Q4 and Q1 when the U.K. had such a meaningful piece of the pie.
Thanks, Ira. I will end it. I don't know if I got anything, but thanks for the time.
Thanks for dialing in, Ken. You got a mic as well.
I think.
Thank you. Mr. Kasbar, there are no further questions at this time. I will now turn the call back to you for closing remarks.
Well, I just wanna thank everybody for dialing in. You know, as we discussed in our prepared comments, we feel pretty good about where we are as a company, as an organization. It's been, you know, an incredible couple of years, and it certainly made the company a much stronger company. The quality of our earnings is, I think, significantly better. The composition of our portfolio is much stronger. The platforms emerging in land and Kinect are starting to, you know, occur, certainly the addition of Flyers.
The common operating model that we're building and that methodology across all of our businesses, you know, to buy, transport, sell, and finance molecules and electrons and deal with the risk management, I think is going to really prove to be a very wise decision and, you know, be able to drive operating leverage. You know, we've got a far better technology backbone than ever before. Certainly, our ability to adjust, you know, is I don't wanna say legendary, but I think it's pretty incredible in terms of our ability to, you know, pivot and deal with what the market has got to throw at us. I think it's a testament to our incredible team and culture. I wanna take a moment to just thank the team.
It's great working with everybody every single day. We've got great support from our customers and suppliers, so it's a pleasure to come to work every day. I wanna thank the support of our, you know, investors or shareholders. So stay tuned. We feel pretty good in terms of where we are now. You know, as I mentioned in my comments, you know, we do have different things hitting our business from quarter to quarter, but our trajectory is good. We feel like we're extremely well-positioned to develop greater efficiency in our conventional, you know, energy and commercial aviation, business aviation, liquid land and marine. Our sustainability activities are getting stronger every day, so we feel really good about that. It's important work that we're doing and we're investing intelligently.
Our digital services and products, you know, helping all of it drive ratable recurring revenue, and become an important component of global commerce. Thanks very much for listening, and look forward to talking to all of you next quarter.
Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.