Baker Hughes delivered strong operational results throughout 2021. During the year we grew orders, revenues, margins, and free cash flow when compared to the full year 2020. We booked $21.7 billion of orders, increased our adjusted operating income* by 52%, and generated $1.8 billion in free cash flow* — our strongest free cash flow year as a combined company.
In OFS, we continued to drive digital transformation through remote operations with customers in multiple regions. The business delivered its largest remote operations solution in Baker Hughes’ history, deploying digital technology across Aramco’s entire drilling operation encompassing more than 200 sites. With higher commodity prices compared to 2020, OFS also saw activity levels increase over the course of 2021. Despite global supply chain constraints and weather-related incidents, the business continued to grow margin rates through cost reductions and efficiency initiatives. While we were pleased with the progress in OFS margin rates in 2021, we still have work to do, and remain focused on achieving 20% EBITDA margin rates by the end of 2022.
In OFE, the offshore environment continued to be challenging. The business primarily focused on rightsizing operations and providing differentiated offerings to customers. We completed the merger of the Subsea Drilling Systems product line with Akastor’s MHWirth business to form HMH, a new global offshore drilling equipment company. OFE also generated continued commercial interest in its non-metallic and flexible pipe systems technologies, securing key contracts with customers, including Petrobras.
TPS continued to operate at a high level. TPS provides turbomachinery technologies and solutions for natural gas, LNG, hydrogen, carbon capture, utilization, and storage (CCUS), clean, integrated power, and industrial applications. TPS secured several major LNG orders throughout the year, including Nigeria LNG’s Train 7 and Woodside’s Pluto LNG Train 2 in Australia.
TPS also secured the majority of our new energy orders in 2021, including equipment orders for the Santos Moomba CCUS project in Australia, and the Air Products NEOM hydrogen project in Saudi Arabia. Our market outlook on LNG — as well as natural gas — continues to be increasingly positive, and the strength of our broad TPS portfolio provides us with multiple growth opportunities into the future.
In DS, our portfolio offers a broad suite of technologies to drive industrial asset management and emissions management leadership across multiple industries. Operationally, we experienced challenges throughout 2021 as supply chain constraints led to lower revenue conversion.We are implementing changes to improve operating margins and to enable DS to grow and improve returns for shareholders. Despite the headwinds, DS took an important step to strengthen its industrial asset management capabilities with the acquisition of ARMS Reliability to enhance the Bently Nevada product line. DS will also benefit from our recent investment and alliance with Augury, an industrial machine health provider, to extend our reach to balance-of-plant equipment.
In 2021, Baker Hughes remained committed to returning cash to shareholders and maintaining a peer-leading capital allocation strategy. Our strong cash flow profile allowed us to return almost $1.2 billion to shareholders through dividends and stock buybacks in 2021, while simultaneously making multiple acquisitions and investments in the industrial and new energy spaces.
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In 2021, we accelerated our strategy, maintained a strong balance sheet, executed for our customers, and delivered clear value to our stakeholders. I want to thank our customers, employees, and shareholders for their support. Our results and the actions we are taking position us for continued growth in 2022 and beyond, as we help to build a more prosperous and sustainable world. I look forward to another year of taking energy forward.
Chairman, President, and Chief Executive Officer
*Adjusted operating income and free cash flow are non-GAAP measures. Please see the reconciliation in the annual report entitled “Reconciliation of GAAP to non-GAAP Financial Measures.”