Clorox (NYSE:) shares were trading more than 3% lower after-hours following the company’s reported Q3 results. The adjusted EPS was $1.31 higher than the $0.99 consensus, but revenues increased 2% year over year to $1.8 million, slightly less than the $1.81 billion consensus. Company also warned of lower margins because cost pressures.

The gross margin fell by 760 basis points from 43.5% to 35.9% in the quarter ended December 31, 2017.

Linda Rendle CEO stated that “we saw strong demand this quarter, and we delivered sequential gross margin enhancements against the backdrop of volatile and difficult environments.” We are seeing that our brands continue to be strong and resilient, which is driving the benefits to the entire business. Our actions to restore margin are picking up momentum, even as cost inflation increases and remains uncertain. Our focus on operations and strategic decisions will position us to provide long-term value for our stakeholders.

According to its 2022 outlook, the company expects EPS between $4.05 and $4.30. This is in contrast with the $4.18 consensus estimate. The company expects revenue to fall between 1% and 4%. Due to increased commodity, manufacturing, and logistic costs than anticipated previously gross margins are expected to drop up to 800 basis points.

Clorox shares were 18% lower year-to-date when the results came in.

By Davit Kirakosyan