Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the condensed consolidated financial statements and the related notes included in Item 1 thereto.

Our business is exposed to a number of macro factors, which influence our outlook and expectations given the current volatile conditions in the industry. All of our outlook expectations are purely based on the market as we see it today, and are subject to changing conditions in the industry.

•International onshore activity: We expect onshore spending outside of North America to continue to improve in 2022 as compared to 2021 in all regions, excluding Russia Caspian, should commodity prices remain at current levels.

•Offshore projects: We expect a recovery in offshore activity and the number of subsea tree awards to grow in 2022 as compared to 2021.

•LNG projects: We remain optimistic on the LNG market long term and view natural gas as both a transition and a destination fuel. We continue to view the long-term economics of the LNG industry as positive.

Oil and natural gas prices are summarized in the table below as averages of the daily closing prices during each of the periods indicated.

(1)Energy Information Administration (EIA) Europe Brent Spot Price per Barrel

(2)EIA Cushing, OK WTI (West Texas Intermediate) spot price

(3)EIA Henry Hub Natural Gas Spot Price per million British Thermal Unit

do not include rigs drilling in certain locations, such as the Russia Caspian region, and onshore China because this information is not readily available.

In evaluating the segment performance, the Company primarily uses the following:

Orders and Remaining Performance Obligations

Revenue and Operating Income (Loss)

Revenue and operating income (loss) for each of our four operating segments is provided below.

Segment Revenues and Segment Operating Income (Loss)

Second Quarter of 2022 Compared to the Second Quarter of 2021

TPS segment operating income was $218 million in the second quarter of 2022 compared to $220 million in the second quarter of 2021. The decrease in income was primarily driven by lower volume and unfavorable FX translation impact, partially offset by price, favorable business mix and increased cost productivity.

DS segment operating income was $18 million in the second quarter of 2022 compared to $25 million in the second quarter of 2021. The decrease in profitability was primarily driven by lower cost productivity and inflationary pressure.

In the second quarter of 2022, corporate expenses were $108 million compared to $111 million in the second quarter of 2021. The decrease of $3 million was primarily driven by cost efficiencies and past restructuring actions.

In the second quarter of 2022, we incurred interest expense, net of interest income, of $60 million, which decreased $5 million compared to the second quarter of 2021. The reduction was primarily driven by higher interest income.

The First Six Months of 2022 Compared to the First Six Months of 2021

DS segment operating income was $33 million in the first six months of 2022 compared to $49 million in the first six months of 2021. The decrease in profitability was primarily driven by lower cost productivity and inflationary pressure, partially offset by higher volume and price.

In the first six months of 2021, the provision for income taxes was $213 million. The difference between the U.S. statutory tax rate of 21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances and changes in unrecognized tax benefits.

Cash flows provided by (used in) each type of activity were as follows for the six months ended June 30:

Cash flows from operating activities generated cash of $393 million and $1,184 million for the six months ended June 30, 2022 and 2021, respectively.

for the six months ended June 30, 2021, mainly due to receivables, inventory, and contract assets as we improved our working capital processes. Accounts payable was also a source of cash as volume increased.

Cash flows from investing activities used cash of $430 million and $130 million for the six months ended June 30, 2022 and 2021, respectively.

Cash flows from financing activities used cash of $868 million and $1,285 million for the six months ended June 30, 2022 and 2021, respectively.

International operations: Our cash that is held outside the U.S. is 60% of the total cash balance as of June 30, 2022. We may not be able to use this cash quickly and efficiently due to exchange or cash controls that could make it challenging. As a result, our cash balance may not represent our ability to quickly and efficiently use this cash.

Our critical accounting estimation processes are consistent with those described in Item 7 of Part II, "Management's discussion and analysis of financial condition and results of operations" of our 2021 Annual Report.

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