Chief Financial Officer at Baker Hughes
Thanks, Lorenzo. I will begin with the total company results and then move into the segment details.
Orders for the quarter were $5.9 billion, down 14% sequentially driven by TPS and OFE, partially offset by an increase in Digital Solutions and OFS. Year-over-year, orders were up 15%, driven by increases across all four segments. We are pleased with the orders performance in the quarter, following strong orders performance in the last two quarters. Remaining Performance Obligation was $24.3 billion, down 6% sequentially. Equipment RPO ended at $8.8 billion, down 11% sequentially and services RPO ended at $15.5 billion, down 3% sequentially. The decrease in the RPO was driven by the suspension of our operations in Russia and foreign currency exchange movements. Our total company book-to-bill ratio in the quarter was 1.2 and our equipment book-to-bill in the quarter was 1.2.
Revenue for the quarter was $5 billion, up 4% sequentially, driven by Digital Solutions, OFS, and OFE, partially offset by lower TPS volumes. Year-over-year, revenue was down 2%, driven by decreases in OFE and TPS, partially offset by increases in OFS and Digital Solutions. Operating loss for the quarter was $25 million.
Adjusted operating income was $376 million, which excludes $402 million of restructuring, impairment, separation, and other charges. Included in these charges was $365 million related to the suspension of our operations in Russia. As I will explain in a moment, our Russian activities were either prohibited under applicable sanctions or unsustainable in the current environment.
Adjusted operating income was up 8% sequentially and up 13% year-over-year. Our adjusted operating income rate for the quarter was 7.5%, up 20 basis points sequentially. Year-over-year, our adjusted operating income rate was up 100 basis points.
Adjusted EBITDA in the quarter was $651 million, up 4% sequentially and up 6% year-over-year. Adjusted EBITDA rate was 12.9%, up 100 basis points year-over-year. Our adjusted operating income and adjusted EBITDA margins were largely impacted by the suspension of our Russia operations during the quarter and foreign currency exchange movements.
Corporate costs were $108 million in the quarter. For the third quarter, we expect corporate costs to decline and be more in line with first quarter levels. Depreciation and amortization expense was $275 million in the quarter. For the third quarter, we expect D&A to decline roughly $5 million sequentially as a result of the impairments taken in the second quarter. Net interest expense was $60 million. Income tax expense in the quarter was $182 million.
GAAP diluted loss per share was $0.84. Included in GAAP diluted loss per share are $426 million of losses related to our OFS business in Russia due to its classification as held for sale at the end of the second quarter. Also included was an $85 million loss from the net change in fair value of our investment in ADNOC Drilling, and a $38 million loss from the net change in fair value of our investment in C3 AI, all of which are recorded in other non-operating loss. Adjusted earnings per share were $0.11.
Turning to the cash flow statement, free cash flow in the quarter was $147 million. Free cash flow in the quarter was impacted by lower collections, which are largely timing related, as well as a build in inventory as we get ready to execute on our large order backlog. For the third quarter, we expect free cash flow to improve sequentially, primarily driven by higher earnings and seasonality. We now expect free cash flow conversion from adjusted EBITDA to be below 50% for the year, due to lower cash generation from Russia. In the second quarter, we continued to execute on our share repurchase program, repurchasing 6.7 million Baker Hughes Class A shares for $226 million, at an average price of $34 per share.
Before I go into the segment results, I would like to give an update on our Russia operations, how these impacted our second quarter results, and how the current situation factors into our forward outlook. As I mentioned earlier, our OFS business in Russia was classified as held for sale at the end of the second quarter. During the second quarter, we took the step to suspend our Russia OFS operations to ensure compliance with all sanctions. As a result, our OFS Russia revenue declined 51% sequentially to approximately $60 million in the second quarter, leading to meaningful cost under absorption as we maintained our full cost base. Looking ahead, we are required to maintain our operating costs in the country until we reach a resolution for our Russian operations.
In TPS, we have suspended work on equipment and service contracts in Russia. As a result, these projects have been removed from RPO and second quarter revenue was impacted by roughly $160 million, but with minimal impact to TPS operating margins. For the full year, we estimate that TPS revenue will be impacted by approximately $400 million but, again, with minimal impact to TPS margins in 2022. In OFE, we have suspended all equipment and service contracts in Russia. OFE will be impacted by lower volume and cost under absorption over the next few quarters due to the removal of these projects from RPO.
Now I will walk you through the segment results in more detail and give you our thoughts on the outlook going forward.
Starting with Oilfield Services, revenue in the quarter was $2.7 billion, up 8% sequentially. International revenue was up 8% sequentially, led by increases in Sub-Saharan Africa, Latin America, Europe, and the Middle East, partially offset by lower revenues in Russia Caspian. North America revenue increased 9% sequentially, with low double-digit growth in North America land. Operating income in the quarter was $261 million, up 18% sequentially. Operating margin rate was 9.7%, with margins increasing 80 basis points sequentially, driven by price improvements and productivity, partially offset by impacts from Russia and cost inflation. Year-over-year margins were up 240 basis points. Excluding Russia, OFS operating margin rate was 10.3% and OFS EBITDA rate was 18%.
As we look ahead to the third quarter, underlying energy fundamentals continue to improve, and we expect to see growth in both International and North American activity, as well as continued improvements in pricing. For the third quarter, OFS revenue should increase sequentially in the mid-single digit range. With this revenue framework, we would expect our margin rate to increase by approximately 50 basis points to 100 basis points sequentially, which assumes that we will continue to carry between $25 million to $30 million of cost per quarter related to Russia.
For the full year 2022, we continue to see an improving outlook across most major markets. In the international markets, we expect the continuation of a broad-based recovery with industry-wide activity growth in the mid-double digits. In North America, we expect continued activity increases, with the broader market set to experience strong growth of 50% or greater.
Given this macro backdrop, we would expect OFS revenue to increase in the mid-double digits in 2022. We expect EBITDA margin rates to increase over the next two quarters and to be between 19% and 20% in the fourth quarter, depending on timing of the resolution of our Russia business.
Moving to Oilfield Equipment. Orders for the quarter were $723 million, up 6% year-over-year, driven by a strong increase in Flexibles and Services, partially offset by a decrease in SPS and the removal of Subsea Drilling Systems from consolidated results. Revenue was $541 million, down 15% year-over-year, primarily driven by SPS, SPC, and the removal of SDS, partially offset by growth in Services and Flexibles. Operating income was negative $12 million, down $40 million year-over-year, primarily driven by lower volume in the quarter. OFE's lower operating margin rate was primarily driven by lower volumes in SPS and some operational challenges on certain projects. Although OFE has had to navigate some challenges this year, the current level of performance is unacceptable and, as Lorenzo mentioned, we are evaluating additional ways to drive cost-out and better operating performance, which includes more integration across OFS and OFE.
For the third quarter, we anticipate revenue to be approximately flat to down low-single digits sequentially, depending on the timing of backlog conversion. We expect operating income to be below breakeven due to cost under absorption following the suspension of contracts related to Russia. For the full year 2022, we still expect a recovery in offshore activity and project awards, which should help drive a double-digit increase in orders. We expect OFE revenue to decline double digits, primarily driven by the de-consolidation of SDS, and OFE margins to be below breakeven.
Next, I will cover Turbomachinery. Orders in the quarter were $1.9 billion, up 23% year-overyear. Equipment orders were up 38% year-over-year, driven by a gas processing award in Saudi Arabia and an order for Cheniere's Corpus Christi Stage 3 expansion. Service orders in the quarter were up 14% year-over-year, driven by installation orders and growth in contractual and transactional services, partially offset by a decrease in upgrades. Revenue for the quarter was $1.3 billion, down 21% versus the prior year. Equipment revenue was down 30%, driven by changes in project schedules, and foreign currency movements. Services revenue was down 11% year-over-year, driven by a decrease in upgrades, transactional services, and Russia-related impacts during the quarter, offset by contractual services. Operating income for TPS was $218 million, down 1% year-over-year. Operating margin rate was 16.8%, up 330 basis points year-over-year. Margin rates in the second quarter were favorably impacted by higher services mix.
Overall, the TPS team has navigated multiple headwinds as the year has unfolded, including Russia-related impacts, foreign currency movements, and a challenging supply chain environment. Despite these headwinds, we still feel confident in the full year operating income outlook relative to our expectations at the beginning of the year. For the third quarter, we expect revenue to increase mid-single digits on a year-over-year basis, driven by higher equipment volume from planned backlog conversion. With this revenue outlook, we expect TPS margin rates to be moderately lower on a year-overyear basis, depending on the ultimate mix between equipment and services. For the full year, we still expect TPS orders to be between $8 billion and $9 billion, driven by increasing LNG awards.
We now expect revenue growth to be roughly flat to up low-single digits versus 2021. The lower revenue growth versus expectations earlier in the year is primarily driven by the suspension of operations in Russia, the depreciation of the Euro versus the dollar, and some modest changes in project execution schedules. On the margin side, we now expect operating income margin rates to be slightly higher on a year-over-year basis, depending on the mix between services and equipment.
Finally, in Digital Solutions, orders for the quarter were $609 million, up 13% year-over-year. DS continues to see a strengthening market outlook and delivered growth in orders across Oil & Gas and Industrial end markets. Sequentially, orders were up 7%, driven by higher Industrial and Power orders. As oil and gas end markets finally start to recover, DS orders are now at the highest level since the fourth quarter of 2019. Revenue for the quarter was $524 million, up 1% year-over-year, driven by higher volumes in PPS and Waygate, partially offset by lower volume in Bently Nevada and Nexus Controls. Sequentially, revenue was up 11%, driven by higher volume in PPS, Bently Nevada, and Nexus Controls, partially offset by lower volume in PSI.
Operating income for the quarter was $18 million, down 28% year-over-year, largely driven by mix, inflation, and lower productivity. Sequentially, operating income was up 21%, driven by higher volume. Overall, DS continues to be affected by both chip and electronic component availability shortages, negatively impacting the convertibility of our backlog, and our ability to drive higher productivity. As Lorenzo mentioned, we continue to make strategic and operational changes across DS designed to improve performance, as evidenced by recent leadership changes and the recently announced sale of Nexus Controls to GE.
For the third quarter, we expect to see low-single digit sequential revenue growth and a slight increase in operating margin rates. For the full year, we expect DS revenue growth in the mid-single digit range and operating income margin rates to average in the mid-single digits for the full year.
With that, I will turn the call back over to Jud.