Chief Financial Officer at Omnicom Group
Thanks, John. As John said, our second quarter results were very solid. Organic growth continued at a very high rate, driven by performance across all of our disciplines. Our growth delivered healthy operating margins and good earnings per share performance. And we continue to return a significant portion of our free cash flow to our investors through dividends and additional share buybacks.
Let's go into the financial details of the quarter, beginning on Slide 4. This view of the reported income statement shows adjustments to make the second quarter of the prior year comparable as well as making the six months for both 2021 and 2022 comparable. As we described last year, for the second quarter of 2021, operating expenses in the second quarter of last year benefited from a gain on the sale of a subsidiary. Interest expense includes a charge in the second quarter of last year on the early extinguishment of debt. And income tax expense in the second quarter of last year was also impacted by the early extinguishment of debt.
In addition, as we discussed last quarter, for the year-to-date 2022 period, operating expenses included charges arising from the effects of the war in Ukraine in the first quarter of this year, and income taxes were also impacted by these charges. As you can see at the bottom of the slide, the net effects of these items resulted in strong EPS of $1.68 versus $1.46 from Q1 of 2021 as adjusted, representing EPS growth of 15.1% in the second quarter. For the six months, EPS of $3.07 as adjusted grew 10% from $2.79, also as adjusted.
Our reported tax rate was 26.5% this quarter, the same level we expect for the remainder of the year. Net interest expense for Q2 of $40.1 million declined by $6.8 million from $46.9 million in Q2 of 2021, excluding the charge from the early extinguishment of debt last year, as previously discussed. The decline was principally driven by an increase in interest income in Q2 of 2022 of approximately $4 million.
Given our principal debt is fixed rate, we expect net interest expense to decline in the second half compared to the prior year as interest income increases due to higher investing rates compared to 2021. Lastly, our diluted share count was down almost 5% year-over-year in the second quarter due to our ongoing share repurchase activity.
Now let's look at our results in more detail, beginning with revenues on Slide 5. Reported revenues were flat as another quarter of strong organic growth at 11.3% was offset by the negative impact of foreign exchange rates and disposition revenue in excess of acquisition revenue. Both of these impacts were expected as we saw the dollar continue to strengthen globally and as we pass the final two months of our divestiture of a specialty media subsidiary last June, which was included in our Advertising & Media discipline in the U.S.
The year-to-date results closely mirror the second quarter. If rates stay where they were as of July 15, we estimate that the impact of foreign exchange rates will reduce our revenue by approximately 6% in the third quarter and by 4.5% for the year. Based on deals completed to date, we expect the impact from net acquisitions and dispositions will result in a reduction of our revenue by approximately 1% in the third quarter, primarily resulting from the disposition of our businesses in Russia, and by approximately 4.5% for the full year.
Turning to Slide 6. It's clear that our organic strength was broad-based across all of our disciplines. Advertising & Media, our largest category, posted 8% organic growth in the quarter, with strong performance in both our media and our creative agencies. Precision Marketing continued its strong performance with 21% organic growth in the second quarter.
Commerce & Brand Consulting was up 11%, led by our branding and design agencies. Experiential had organic growth of 37%, but it's worth noting that lockdowns in Q2 in China weighed on these otherwise good results. As a reference, in reported dollar terms for the first six months of 2022, this discipline has reached approximately 80% of its pre-pandemic revenue levels.
Execution & Support was up 9%, led by our merchandising and point-of-sale businesses. PR was up a very strong 16%, reflecting growth from both long-standing and new clients and increased business activity across many sectors of the economy. And Healthcare, which is 10% of our revenues, grew an impressive 9%.
Turning to Slide 7. We once again saw strong organic growth rates in every region with the exception of Asia-Pacific, which was impacted by the lockdowns in China, as I just mentioned. This was nicely offset by acceleration in the U.S., Europe and the U.K. In the U.S., which is more than half of our revenues, our 10.7% organic growth was primarily driven by growth in Advertising & Media, Public Relations, Precision Marketing and Healthcare.
Outside of the U.S., growth was led by Europe, which was primarily driven by Advertising & Media, Experiential and PR. Despite the headwinds in Experiential in Asia, the region saw strong results in Advertising & Media, brand consulting and Healthcare.
Looking at revenue by industry sector on Slide 8 relative to the second quarter of 2021. The broad distribution of our clients remained relatively stable. As a percentage of the total, we did see an increase in technology, offset by reductions in both retail and travel and entertainment. Two sectors that have both been impacted by the economy and by some lingering pandemic effects.
Let's now turn to Slide 9 and look at our operating expenses for the quarter. In total, our operating expenses were relatively flat, which is a good result given the strong growth in our business, tight labor markets in several regions and our continued investment in our strategic focus areas. Salary and related service costs were 50.5% of revenue compared to 50.9% last year after adjusting 2021 for amounts related to acquisitions and dispositions.
Third-party service costs were 21.4% of revenue compared to 20.1% last year, also after adjusting for amounts related to acquisitions and dispositions with the increase reflecting growth in our businesses. Occupancy and other costs, which are less directly linked to changes in revenue, were flat year-over-year.
We will continue to manage our real estate footprint in alignment with how people are working in our offices post pandemic. And it's also worth mentioning that our rent expense was down this quarter. S&A expenses were up 7.5% year-over-year, following the increase in our business activity, including higher marketing and professional fees compared to last year.
Turning to Slide 10. Our second quarter operating profit was $541.6 million, a 4.6% increase from last year and our operating profit margin of 15.2% on total revenues was well above the comparable amount for last year of 14.5% as adjusted.
Please turn now to Slide 11 for our cash flow performance. As you know, we define free cash flow as net cash provided by operating activities, excluding changes in working capital, which are generally positive for us on an annual basis. Free cash flow for the first six months of 2022 was $768 million, down $28 million or 3.5% from the first half of last year. However, $48 million of the charges we recorded in the first quarter for the effects of the war in Ukraine were cash-related. Absent this, we were up a bit year-over-year.
Regarding our uses of cash, we used $294 million of cash to pay dividends to common shareholders and another $38 million for dividends to non-controlling interest shareholders. Our capital expenditures of $43 million were at normal levels. Acquisitions net of dispositions and other items were $289 million.
And lastly, our net stock repurchases during the first quarter were $393 million, including another $100 million in the second quarter. As we said on our call in April, for the full year 2022, we expect we will spend at our historical annual range of around $500 million to $600 million.
On Slide 12 is an overview of our credit, liquidity and debt maturities. There were no changes in our outstanding debt during the second quarter, and our gross leverage at June 30 was 2.4x. In addition to $3.3 billion of cash and short-term investments, we also have a $2 billion U.S. commercial paper program, backstopped by our $2.5 billion revolving credit facility.
I'll end my prepared remarks today on Slide 13, which shows our strong return on invested capital of 24.4% for the 12 months ended June 30, a 41.9% return on equity. These are very strong and very competitive returns and reflect Omnicom's consistent operating performance and approach to capital allocation.
At this point, operator, please open the lines up for questions and answers. Thank you.