Boeing Co. (NYSE: BA) reported third-quarter 2018 results before markets opened Wednesday. The aerospace company posted adjusted diluted earnings per share (EPS) of $3.58 on revenues of $25.15 billion. In the same period a year ago, the company reported EPS of $2.62 per share on revenues of $24.22 billion. Third-quarter results also compare to consensus estimates for EPS of $3.47 and $23.98 billion in revenues.

The number that matters most to Boeing — and to its shareholders — is operating cash flow, and third-quarter cash flow totaled $4.56 billion, down sequentially from $4.68 but up 34% year over year from $3.4 billion. Operating cash flow totaled $13.34 billion in 2017, and at the end of the first quarter the company forecast cash flow for this year at $15.0 billion to $15.5 billion. That forecast has not changed.

Boeing raised its revenue forecast by $1 billion at each end to a new range of $98 billion to $100 billion for the year. The company said that defense volume and services growth, including the acquisition of KLX, drove the increase.

Boeing also raised EPS guidance. GAAP EPS is now forecast at $16.90 to $17.10, up by $0.50 at each end of the prior guidance.

Adjusted EPS guidance was raised by $0.60 at each end to a new range of $14.90 to $15.10. The company said the increase was due to a lower-than-expected tax rate and improved performance in its commercial aircraft division.

Boeing’s board chair, president and chief executive, Dennis Muilenburg, said:

During the quarter we captured important new defense business, winning and investing in the MQ-25 and T-X programs and securing the MH-139 contract, clearly demonstrating the value Boeing brings to customers while positioning us well for future growth opportunities. Within the Commercial Airplanes business, the 777X static test airplane was completed and moved into test setup and the team’s focus on execution across our production programs continued to drive outstanding performance and strong operating margins. Our Global Services business continues to deliver on total lifecycle value to our customers, with key wins in the quarter including P-8 Poseidon training contracts for the U.S. Navy and Royal Australian Air Force and an order from GECAS for 20 737-800 Boeing Converted Freighters.

The company maintained its previous forecast for 2018 commercial jet deliveries at 810 to 815, far above 2017’s record level of 763 deliveries. The company delivered 190 commercial jets in the third quarter, including 57 737 MAX airplanes.

Analysts are looking for fourth-quarter EPS of $4.22 and revenues of $26.98 billion. For the full year, current estimates call for EPS of $14.65 and revenues of $98.53 billion.

Boeing’s deferred production costs on the 787 program fell to $23.58 billion, down by $660 million sequentially. Tooling and other non-recurring costs for the program also declined, from $2.9 billion at the end of the second quarter to $2.77 billion.

The company’s backlog of commercial jets now stands at more than 5,800 airplanes valued at $413 billion at contract (not list) prices. The value of the backlog slipped by $3 billion sequentially.

Global services revenue increased by 14% to $4.09 billion and defense revenue rose by 13%. The defense segment posted a loss of $245 million, which Boeing attributed to $691 million of charges related to planned investments in the T-X and MQ-25 programs and $64 million related to cost growth on the KC-46 Tanker program.

Boeing’s effective tax rate in the quarter was approximately 9.5%, down from 15.1% in the prior quarter. The company again made no mention of any potential impact from tariffs.

Boeing’s income tax gain for the quarter totaled $230 million, up from an expense of $773 million in the same quarter last year. After-tax income rose by $553 million year over year in the quarter. For the year to date, after-tax income has risen by $1.9 billion to $7.04 billion. Pretax earnings are up $368 million for the year to date and fell by $450 million compared with the year-ago third quarter.

Investors are happy with the Boeing’s third-quarter performance. The company appears to be using its tax savings to offset the revenue shortfalls in the defense business. That’s probably good long-term thinking, but beginning next year, the tax savings become less of a factor in year-over-year growth.

The stock traded up about 4.5% to $365.50, in a 52-week range of $254.50 to $394.28. The consensus price target as of last night was $413.52.

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