Analysts were calling for Rockwell Automation (NYSE:ROK) to post fiscal third-quarter earnings of $1.54 a share on revenues of roughly $6.43 billion. The company came through on the bottim line, with adjusted earnings beating consensus estimates by $0.05 a share on revenues that were a touch below expectations. That solid bottom-line showing came despite the impact of a strong U.S. dollar, which is hiding solid revenue in a weakening demand environment.

A versatile business
Rockwell Automation's bread and butter is helping customers connect and control the various machines involved in running their businesses. That includes everything from oil refineries to bottling. The backbone of the company's product line is its Logix offering, which works with competitor products as well as Rockwell's products. So Rockwell not only allows companies to better manage their production processes, but it can also generally do so by working with a customer's existing equipment.

Source: Wikimedia Commons.

That's a key differentiation for the company, because upgrading entire production systems can be risky and expensive. Since Rockwell can step in and overlay upgrades on existing systems, often in incremental ways, it reduces risk for customers and gets Rockwell's foot in the door for future deals. It also makes working with this automation specialist desirable even during weak periods -- which is an important backdrop.

Hiding in the top line
Rockwell Automation's organic sales growth, which excludes the impact of currency fluctuations, was a solid 2.2% in the quarter compared with the prior year. Currency headwinds because of a strong dollar, however, took the reported top-line number down 6.8%, year over year. The end result was a year-over-year top-line decline of roughly 4.5%.

That said, the slowdown in the oil patch and generally softer industrial production growth that led Rockwell to trim its revenue forecast last quarter remain in place. In fact, the company again tried to temper expectations, calling for reported sales of roughly $6.4 billion for the full year. That's slightly below the average analyst estimate of $6.43 billion.

So, in the end, the top-line number for the quarter looks worse than it actually is because of currency headwinds. And underneath, because of the versatility of its offering, Rockwell appears to be weathering the spending slowdown that it's been talking about in recent quarters quite well, which squares well with the versatility of its product offering. You just have to look a little deeper to see this because of the impact of a strong U.S. dollar.

A Rockwell system. Source: Dailynetworks, via Wikimedia Commons.

The bottom's doing fine
Earnings, meanwhile, are holding up well because of increased productivity. In the quarter, adjusted earnings of $1.59 a share were up 7% year over year, the driving force being an overall increase in operating margins, which came in at 18.1% compared with 16.6% last year.

The Control Products & Solutions division (a bit under 60% of sales) was the main driver, with operating margins increasing more than three percentage points year over year to 16.1%. Margins from the Architecture & Software division (a little over 40%) inched up about half a percentage point to 29.2%. As in previous quarters, organic sales growth and solid productivity were core drivers of the margin improvement. That said, also helping the bottom line along was the company's continued share-repurchase program. In the quarter, the company bought nearly a million shares.

That said, Rockwell also trimmed the top side of its full-year guidance, expecting earnings this fiscal year to be between $6.55 and $6.70 a share. That's down from a range of $6.50 to $6.80. The new guidance, however, remains roughly around where analysts had been expecting going into the quarter.

Holding up
The best way to describe Rockwell's results is probably "holding up well." There are clear headwinds in play, notably a softening demand picture, but organic sales are continuing to inch forward. That, however, is being hidden by currency fluctuations that are making the top line look much worse than underlying business results. Margin improvement and share buybacks, meanwhile, are keeping the bottom line strong. Look for more of the same when the company announces full-year results in a few months.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.