8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 3, 2020

ARMSTRONG FLOORING, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-37589	47-4303305
(State or other jurisdiction of incorporation )	(Commission File No.)	(IRS Employer Identification No.)
2500 Columbia Avenue P.O. Box 3025 Lancaster, Pennsylvania		17603
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (717) 672-9611

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	AFI	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Item 2.02 Results of Operations and Financial Condition

On March 3, 2020, Armstrong Flooring, Inc. (the “Company”) issued a press release announcing its fourth quarter and full year 2019 financial results. The full text of the press release is attached hereto as Exhibit 99.1.

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished herewith and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.

Section 7 – Regulation FD

Item 7.01 Regulation FD Disclosure.

On March 3, 2020, the Company issued a press release announcing that it will report its fourth quarter and full year 2019 financial results, discuss its multi-year strategic roadmap and conduct a question-and-answer session via a live webcast and conference call on March 3, 2020 at 10:00 a.m. ET. The live webcast and accompanying slide presentation will be available in the Investors section of the Company’s website at www.armstrongflooring.com. To participate in the call, please dial 877-407-0789 (domestic) or 201-689-8562 (international). A replay of the conference call will be available for 90 days, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13698199. The press release and slide presentation are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.

The information in Item 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished herewith and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
99.1	Press Release of Armstrong Flooring, Inc., dated March 3, 2020
99.2	Fourth Quarter Results and Strategic Business Review of Armstrong Flooring, Inc., dated March 3, 2020

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ARMSTRONG FLOORING, INC.
By:	/s/ Christopher S. Parisi
	Christopher S. Parisi
	Senior Vice President, General Counsel, Secretary & Chief Compliance Officer

Date: March 3, 2020

EX-99.1

Exhibit 99.1

ARMSTRONG FLOORING REPORTS FOURTH QUARTER AND FULL YEAR 2019 RESULTS

• Full Year Net Sales of $626.3 Million

• Full Year Net Loss of $58.5 Million and Adjusted Net Loss of $37.9 Million

• Full Year Adjusted EBITDA of $24.4 Million

• Introduces Multi-year Strategic Roadmap Focused on Operational Enhancements and Long-Term Growth and Profitability

Lancaster, PA, March 3, 2020. Armstrong Flooring, Inc. (NYSE: AFI) (“Armstrong Flooring” or the “Company”), a leader in the design and manufacture of innovative flooring solutions, today reported financial results for the fourth quarter and full year ended December 31, 2019.

Michel Vermette, President and Chief Executive Officer, commented, “Fourth quarter results were softer year-over year, in line with our expectations. Moving into 2020, we have begun to execute our multi-year plan to expand, simplify and strengthen our business to generate stronger performance and augment the trajectory of our long-term profitability.”

Fourth Quarter and Full Year 2019 Results Compared with 2018 Results

Consolidated Results

(Dollars in millions except per share data)	Three Months Ended December 31,									Twelve Months Ended December 31,
	2019			2018			Change			2019			2018			Change
Net sales	$	141.3		$	153.8			(8.1	%)	$	626.3		$	728.2			(14.0	%)
Operating (loss)	($	21.0	)	($	16.6	)		N/M		($	61.1	)	($	17.4	)		N/M
Net (loss)	($	25.1	)	($	171.0	)		N/M		($	58.5	)	($	163.0	)		N/M
Diluted (loss) per share	($	1.14	)	($	6.57	)		N/M		($	2.42	)	($	6.27	)		N/M
Adjusted EBITDA	($	4.3	)	$	1.8			N/M		$	24.4		$	57.5			(57.5	%)
Adjusted EBITDA margin		(3.1	%)		1.2	%		N/M			3.9	%		7.9	%		(400	bps)
Adjusted net (loss) income	($	23.1	)	($	9.0	)		N/M		($	37.9	)	$	5.8			N/M
Adjusted diluted (loss) earnings per share	($	1.05	)	($	0.35	)		N/M		($	1.57	)	$	0.22			N/M

In the fourth quarter of 2019, net sales decreased 8.1% to $141.3 million from $153.8 million in the fourth quarter of 2018, including an adverse currency impact of 50 basis points. The decrease in net sales was due to unfavorable mix, volume, and price. Lower mix and volume in the fourth quarter of 2019 primarily reflected share loss in some categories. Mix was driven by lower relative LVT sales while price was impacted by competitive pressures.

The net loss in the fourth quarter of 2019 was $25.1 million, or diluted loss per share of $1.14, as compared to a net loss of $171.0 million, or diluted loss per share of $6.57, in the prior year quarter, which included a loss on disposal of discontinued operations of $153.8 million. The fourth quarter 2019 included pre-tax charges of $0.5 million primarily related to executive transition and cost reduction expenses. Adjusted net loss was $23.1 million, or adjusted diluted loss per share of $1.05, as compared to an adjusted net loss of $9.0 million, or adjusted diluted loss per share of $0.35, in the prior year quarter.

Fourth quarter 2019 adjusted EBITDA was ($4.3) million, as compared to $1.8 million in the prior year quarter. The decrease in adjusted EBITDA was primarily attributable to lower net sales and higher manufacturing costs, partially offset by benefits from improved raw material sourcing.

For the full year 2019, net sales decreased 14.0% to $626.3 million as compared to $728.2 million in 2018. The decrease in net sales was primarily driven by unfavorable volumes, reflecting relative changes in distributor inventory levels compared to the prior year due to significant customer purchases in 2018 ahead of U.S. tariff increases.

Full year 2019 net loss was $58.5 million, or diluted loss per share of $2.42, as compared to net loss of $163.0 million, or diluted loss per share of $6.27, in the prior year. Adjusted net loss was $37.9 million, or adjusted diluted loss per share of $1.57, as compared to an adjusted net income of $5.8 million, or adjusted diluted earnings per share of $0.22, in the prior year.

Full year 2019 adjusted EBITDA was $24.4 million, as compared to $57.5 million in the prior year. The decrease in adjusted EBITDA was primarily attributable to lower net sales and increased input cost inflation pressure, partially offset by improved productivity.

In December 2019, the Company successfully completed the replacement of its prior credit facility with a new $100 million asset-based facility. At December 31, 2019, the Company had cash and cash equivalents $27.1 million and long-term debt of $42.7 million.

While the Company is still completing its assessment of its internal control over financial reporting as of December 31, 2019, in its upcoming fiscal 2019 Annual Report on Form 10-K, it expects to report a material weakness in internal control. The weakness relates to information technology general controls around a specific type of customer rebate program that we use. As of the date of this release, there have been no misstatements identified in the financial statements as a result of these internal control deficiencies, and the Company expects to timely file its Form 10-K. Remediation efforts have begun, but the material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and we conclude through testing that the controls are operating effectively. We expect the remediation to be completed by the end of fiscal 2020.

Multi-year Strategic Roadmap

Following a comprehensive review of the business to improve the direction of Armstrong Flooring and with the full support of its Board of Directors, the Company has established a multi-year strategic roadmap to transform and modernize its operations to become a leaner, faster growing and more profitable business. The roadmap encompasses three critical objectives, including the expansion of sales through closer alignment with end customers, the simplification of operations and product offerings to compete more effectively, and the strengthening of its marketing capabilities, merchandising, and branding to further build upon the Company’s leadership position in the resilient flooring industry.

The Company has implemented a new operating model to more effectively accomplish its three objectives under its multi-year roadmap. The operating model is entirely centered on strengthening the Company’s connection with end customers and repositioning its culture for excellence by

• Placing the customer first by aligning services and products through a more seamless value chain

• Leading the industry in product innovation in both branded and private label opportunities

• Simplifying processes and operating complexity to become more competitive and efficient

• Realigning the go-to-market model to reach all relevant channels and customers

• Implementing system changes across the plant network to improve operations, drive down costs and reignite organic growth

• Investing thoughtfully with a returns-focused mindset, supported by an improved incentive structure

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The Company is confident that these actions will allow it to better navigate the rapidly expanding and evolving addressable resilient flooring market, while reversing many years of operational underperformance due to regression in multiple channels, a slow-turning product portfolio, underutilized assets and complex infrastructure.

The Company anticipates the benefits of its initiatives to be realized over a multi-year period. The Company anticipates 2020 to be a transitional year, with improvement in sales attributable to better volume and price / mix, helping to produce a higher gross profit margin. These improvements in 2020 will be offset by planned SG&A investments that are being made to help drive long-term growth. In addition, certain SG&A benefits in 2019 will not repeat in 2020, therefore adjusted EBITDA dollars and margin are expected to decrease significantly on a percentage basis in 2020 compared to 2019. Moving beyond 2020, the Company expects adjusted EBITDA to increase each year as accretive initiatives and investments drive meaningful benefits to results.

Mr. Vermette concluded, “We are pleased to unveil our strategic roadmap to simultaneously address the challenges impacting our business, while positioning ourselves to better serve all addressable customers. I am confident that our company will become more lean, agile and profitable with this customer-focused strategy to transform and modernize the way we do business. While 2020 will be a transitional year as we lay the foundation of our growth pillars, we look forward to advancing our strategy and delivering great value for our shareholders in the years ahead.”

Conference Call and Webcast

The Company will hold a live webcast and conference call to review financial results, discuss its multi-year strategic roadmap and conduct a question-and-answer session on Tuesday, March 3, 2020 at 10:00 a.m. ET. The live webcast and accompanying slide presentation will be available in the Investors section of the Company’s website at www.armstrongflooring.com. To participate in the call, please dial 877-407-0789 (domestic) or 201-689-8562 (international). A replay of the conference call will be available for 90 days, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13698199.

About Armstrong Flooring

Armstrong Flooring, Inc. (NYSE: AFI) is a leader in the design and manufacture of innovative flooring solutions. Headquartered in Lancaster, Pennsylvania, the Company safely and responsibly operates 8 manufacturing facilities globally, working to provide the highest levels of service, quality and innovation to ensure it remains as strong and vital as its 150-year heritage. Learn more at www.armstrongflooring.com.

Forward Looking Statements

Disclosures in this release and in our other public documents and comments contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements provide our future expectations or forecasts and can be identified by our use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “outlook,” “target,” “predict,” “may,” “will,” “would,” “could,” “should,” “seek,” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. Forward-looking statements, by their nature, address matters that are uncertain and involve risks because they relate to events and depend on circumstances that may or may not occur in the future. As a result, our actual results may differ materially from our expected results

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and from those expressed in our forward looking statements. A more detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those projected, anticipated or implied is included in our reports filed with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update any forward-looking statements beyond what is required under applicable securities law.

Contact Information

Investors:

Doug Bingham

SVP, Chief Financial Officer

717-672-9300

IR@armstrongflooring.com

Media:

Alison van Harskamp

Director, Corporate Communications

717-672-7545

aficorporatecommunications@armstrongflooring.com

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Armstrong Flooring, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in millions except per share data)

(Unaudited)

	Three months ended December 31,						Twelve months ended December 31,
	2019			2018			2019			2018
Net sales	$	141.3		$	153.8		$	626.3		$	728.2
Cost of goods sold		126.1			128.8			541.0			585.0
Gross profit		15.2			25.0			85.3			143.2
Selling, general, and administrative expense		36.2			41.6			146.4			160.6
Operating (loss)		(21.0	)		(16.6	)		(61.1	)		(17.4	)
Interest expense		1.7			1.9			4.4			4.8
Other expense		0.6			0.7			1.8			2.9
(Loss) from continuing operations before income taxes		(23.3	)		(19.2	)		(67.3	)		(25.1	)
Income tax expense (benefit)		4.6			(4.3	)		1.6			(6.0	)
(Loss) from continuing operations		(27.9	)		(14.9	)		(68.9	)		(19.1	)
(Loss) earnings from discontinued operations		—			(2.3	)		—			9.9
Gain (loss) on disposal of discontinued operations		2.8			(153.8	)		10.4			(153.8	)
Net earnings (loss) from discontinued operations		2.8			(156.1	)		10.4			(143.9	)
Net (loss)	$	(25.1	)	$	(171.0	)	$	(58.5	)	$	(163.0	)
Weighted average number of common shares outstanding - Basic		21.9			26.0			24.1			26.0
Basic (loss) per share of common stock	$	(1.14	)	$	(6.57	)	$	(2.42	)	$	(6.27	)
Weighted average number of common shares outstanding - Diluted		21.9			26.0			24.1			26.0
Diluted (loss) per share of common stock	$	(1.14	)	$	(6.57	)	$	(2.42	)	$	(6.27	)

Consolidated Balance Sheet

(Dollars in millions)

	December 31, 2019		December 31, 2018
Assets
Current Assets:
Cash	$	27.1	$	173.8
Accounts and notes receivable, net		36.1		39.0
Inventories, net		111.6		139.5
Other current assets		10.7		18.6
Total current assets		185.5		370.9
Property, plant, and equipment, net		277.2		296.1
Other non-current assets		39.5		41.2
Total assets	$	502.2	$	708.2
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	104.4	$	141.4
Short-term debt and current installments of long-term debt		0.2		28.7
Other current liabilities		—		0.5
Total current liabilities		104.6		170.6
Long-term debt		42.5		70.6
Postretirement benefit liabilities		59.7		55.7
Pension benefit liabilities		16.0		11.3
Other long-term liabilities		11.1		9.0
Total liabilities		233.9		317.2
Total stockholders’ equity		268.3		391.0
Total liabilities and stockholders’ equity	$	502.2	$	708.2

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Supplemental Reconciliations of GAAP to non-GAAP Results (unaudited)

To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (GAAP), the Company provides additional measures of performance adjusted to exclude the impact of restructuring charges and related costs, impairments, the non-cash impact of the Company’s U.S. pension plan, and certain other gains and losses. Free cash flow is defined as net cash from operating activities less purchases of property, plant and equipment. The Company uses these adjusted performance measures in managing the business, including in communications with its Board of Directors and employees, and believes that they can provide users of this financial information with meaningful comparisons of operating performance between current and prior periods. In addition, the Company has applied pro forma adjustments to its non-GAAP results for periods prior to completion of the sale of the Company’s wood flooring business. These adjustments represent the elimination of certain shared costs that were formerly allocated to the divested wood flooring segment and are intended to reflect, on a pro forma basis, the retroactive elimination of these costs in accordance with the Company’s ongoing cost optimization program which, when combined with certain payments under the Transition Services Agreement entered into with the purchaser, are expected to offset the impact of substantially all of these costs. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance, as well as its prospects for future performance. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is included in this release and on the Company’s website. These non-GAAP measures should not be considered in isolation or as a substitute for the most comparable GAAP measures. Non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies. The Company does not provide financial guidance for forecasted net income since certain items that impact net income are outside of our control and cannot be reasonably predicted. Therefore, the Company is unable to provide a reconciliation of its Adjusted EBITDA guidance to net income, the most comparable financial measure calculated in accordance with GAAP.

(Dollars in millions except per share data)
	Three Months Ended December 31,
	2019			2018
Net (loss)	($	25.1	)	($	171.0	)
Net (income) loss from discontinued operations		(2.8	)		156.1
Interest expense		1.7			1.9
Other expense		0.6			0.7
Taxes		4.6			(4.3	)
Operating (loss)		(21.0	)		(16.6	)
Depreciation and amortization		15.5			11.2
Expenses related to inventory write-downs		—			—
Expenses related to merchandizing write-downs		(0.1	)		—
Expenses related to executive transition		0.4			—
Expenses related to cost reduction initiatives, special projects, and plant closures		0.1			1.5
U.S. pension expense		0.7			0.9
Pro forma adjustment for corporate expense		—			4.8
Adjusted EBITDA	($	4.3	)	$	1.8

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	Three Months Ended December 31,
	2019						2018
	$ million			Per diluted share			$ million			Per diluted share
Net income (loss)	($	25.1	)	($	1.14	)	($	171.0	)	($	6.57	)
Expenses related to executive transition		0.4						—
Expenses related to merchandising write-downs		(0.1	)					—
Expenses related to cost reduction initiatives, special projects, and plant closures, including accelerated depreciation		4.8						1.5
Pro forma adjustment for corporate expense		—						4.8
U.S. pension expense		0.7						0.9
Other expense		0.6						0.7
Tax impact of adjustments at statutory rate		(1.6	)					(2.0	)
Net (income) loss from discontinued operations		(2.8	)					156.1
Adjusted net (loss)	($	23.1	)	($	1.05	)	($	9.0	)	($	0.35	)

	Twelve Months Ended December 31,
	2019			2018
Net (loss)	($	58.5	)	($	163.0	)
Net (earnings) loss from discontinued operations		(10.4	)		143.9
Interest expense		4.4			4.8
Other expense		1.8			2.9
Taxes		1.6			(6.0	)
Operating (loss)		(61.1	)		(17.4	)
Depreciation and amortization		50.7			44.7
Expenses related to executive transition		7.4			—
Expenses related to inventory write-downs		13.6			—
Expenses related to merchandising write-downs		5.9			—
Expenses related to cost reduction initiatives, special projects, and plant closures		5.2			7.5
U.S. pension expense		2.7			3.8
Pro forma adjustment for corporate expense		—			19.0
Adjusted EBITDA	$	24.4		$	57.5

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	Twelve Months Ended December 31,
	2019						2018
	$ million			Per diluted share			$ million			Per diluted share
Net (loss)	($	58.5	)	($	2.42	)	($	163.0	)	($	6.27	)
Expenses related to executive transition		7.4						—
Expenses related to inventory write-downs		13.6						—
Expenses related to merchandising write-downs		5.9						—
Expenses related to cost reduction initiatives, strategic projects and plant closures, including accelerated depreciation		9.8						7.5
Pro forma adjustment for corporate expense		—						19.0
U.S. pension expense		2.7						3.8
Other (income) & expense		1.8						2.9
Tax impact of adjustments at statutory rate		(10.3	)					(8.3	)
Net loss (earnings) from discontinued operations		(10.4	)					143.9
Adjusted Net (Loss) Income	($	37.9	)	($	1.57	)	$	5.8		$	0.22

Rows and columns may not foot due to rounding.

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EX-99.2

Fourth Quarter Results and Strategic Business Review March 3, 2020

SAFE HARBOR STATEMENT Disclosures in this release and in our other public documents and comments contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements provide our future expectations or forecasts and can be identified by our use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “outlook,” “target,” “predict,” “may,” “will,” “would,” “could,” “should,” “seek,” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. Forward-looking statements, by their nature, address matters that are uncertain and involve risks because they relate to events and depend on circumstances that may or may not occur in the future. As a result, our actual results may differ materially from our expected results and from those expressed in our forward looking statements. A more detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those projected, anticipated or implied is included our reports filed with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update any forward-looking statements beyond what is required under applicable securities law. The information in this presentation is only effective as of the date given, March 3, 2020, and is subject to change. Any distribution of this presentation after March 3, 2020, is not intended and will not be construed as updating or confirming such information. Armstrong Flooring, Inc. competes globally in many diverse markets. References to "market" or "share" data are simply estimations based on a combination of internal and external sources and assumptions. They are intended only to assist discussion of the relative performance of product segments and categories for marketing and related purposes. No conclusion has been reached or should be reached regarding a "product market," a "geographic market" or “market share,” as such terms may be used or defined for any economic, legal or other purpose. In addition, we will be referring to “non-GAAP financial measures” within the meaning of SEC Regulation G. Management uses non-GAAP measures, including Adjusted EBITDA and Free Cash Flow, in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods. We remove the impact of certain discrete expenses and income. The non-cash expense impact of the U.S. pension and depreciation and amortization is also excluded. A reconciliation of the differences between these measures with the most directly comparable financial measures calculated in accordance with GAAP can be found in the appendix section of this presentation.

TODAY’S PRESENTERS MICHEL VERMETTE PRESIDENT & CEO Appointed CEO in September 2019 20+ years experience in the flooring industry and business transformation Former President of Residential Carpet at Mohawk Industries Multiple Business Unit President roles at Mohawk, Ind. DOUG BINGHAM SVP, CFO Joined Armstrong Flooring in 2007 Previously VP, Treasury and Investor Relations and Regional CFO based in Shanghai Prior finance experience with Intel Corporation, Wal-Mart, and Abercrombie & Fitch AGENDA Q4 and Full Year 2019 Results Review Doug Bingham Strategic Business Update Michel Vermette Doug Bingham

Fourth Quarter and Full Year 2019 Results Review

2018 Adjusted EBITDA $2M Volume (2) Price / Mix (2) Input Costs 1 Mfg Costs (2) SG&A (1) 2019 Adjusted EBITDA ($4M) AFI Q4 2019 RESULTS v KEY HIGHLIGHTS Share loss in some categories, especially in residential Commercial sales positive YOY in the quarter Unfavorable fall through from lower net sales Manufacturing costs higher See appendix for reconciliations of non-GAAP measures.

AFI FULL YEAR 2019 RESULTS 2018 Adjusted EBITDA $58M Volume (24) Price / Mix -- Input Costs (14) Mfg Costs 3 SG&A 3 2019 Adjusted EBITDA $24M KEY HIGHLIGHTS Challenging prior year comparison due to tariff-related pre-buy activity Share loss in some categories, especially in residential Unfavorable fall through from lower net sales Higher input costs primarily attributable to additional tariff costs Productivity gains SG&A benefit from TSA income and lower incentive compensation See appendix for reconciliations of non-GAAP measures.

FREE CASH FLOW AND LIQUIDITY Strong balance sheet to support growth strategy Replaced credit facility with ABL facility with more favorable terms to Armstrong Flooring (Dollars in Millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 YTD 2019 vs YTD 2018 Operating Cash Flow ($63) $29 $32 ($4) ($6) ($69) Capex (9) (7) (7) (6) (29) +6 Free Cash Flow (72) 23 25 (10) (35) (62) See appendix for reconciliations of non-GAAP measures.

Business Update: Multi-Year Strategic Roadmap

COMPANY OVERVIEW Strong Resilient Fundamentals: Fastest growing flooring segment Brand: Well-known resilient flooring brand for over 100 years 2019 Net Sales of $626 million 2019 Adj. EBITDA of $24 million Manufacturing Footprint: 6 facilities in U.S., 1 in China, 1 in Australia Attractive Product and End-Market Mix Lancaster, PA LVT & Res Sheet Plant Beech Creek, PA Printed Film Plant Stillwater, OK LVT & Res Sheet Plant Kankakee, IL VCT Plant South Gate, CA Res Tile Plant Jackson, MS VCT Plant See appendix for reconciliations of non-GAAP measures. Source: Management estimates

NEW OPERATING MODEL from to

WHAT WE WANT YOU TO TAKE AWAY FROM TODAY Large addressable market opportunity in commercial and residential Well positioned in geographic markets and product categories Clear understanding of U.S. performance issues Focused strategy to transform and modernize business AFI will become more agile, faster growing and more profitable

RESILIENT EXPANDING INTO ALL CATEGORIES Commercial Market ($7B) Note: Addressable market is North America only. Source: Floor Covering News Residential Market ($13B) Armstrong Flooring Brand Diamond 10® Technology Non-PVC offering Innovation pipeline Global Service capabilities Superior product performance in international markets Domestic manufacturing Faster service with local sources of supply Company Strengths Figures in chart shown in $ millions.

WHAT WE WANT YOU TO TAKE AWAY FROM TODAY Large addressable market opportunity in commercial and residential Well positioned in geographic markets and product categories Clear understanding of U.S. performance issues Focused strategy to transform and modernize business AFI will become more agile, faster growing and more profitable

CHANNELS/MARKETS/PRODUCTS WHERE WE OPERATE Luxury Vinyl Tile & Planks Commercial Sheet Vinyl Composition Tile Custom Capability (Design/Shapes/Sizes/Service) Wall Base/Accessories Installation Solutions Focus on and build out organizational capability for the identified channels and verticals COMMERCIAL PRODUCTS North America Asia Australia Big Box & Warehouse Distribution Commercial National Accounts Independent Retailers Flooring Contractors & Groups Residential & Commercial Specified Builder & Multi-Family Installation Solutions WITH OUR BRAND Big Box & Warehouse Retail Buying Groups OEM GEOGRAPHY PRIVATE LABEL (emerging) RESIDENTIAL PRODUCTS Luxury Vinyl Tile & Planks Residential Tile Residential Sheet Accessories

ARMSTRONG FLOORING BRAND Most recognized hard surface brand Significant opportunities exist to accelerate growth and reduce operating costs Best Flooring From Consumer Reports' Tests 101 Top Products: Flooring Best of Year Awards Winners Favorite Hard Surface Manufacturer Contractors

WHAT WE WANT YOU TO TAKE AWAY FROM TODAY Large addressable market opportunity in commercial and residential Well positioned in geographic markets and product categories Clear understanding of U.S. performance issues Focused strategy to transform and modernize business AFI will become more agile, faster growing and more profitable

CORE BUSINESS AREAS OF UNDERPERFORMANCE Significant opportunities exist to accelerate growth and reduce operating costs Empowerment of distributors to manage brand and reduction of our direct sales force have impacted customer connectivity REGRESSION IN MULTIPLE CHANNELS Multiple product collections are underperforming, and LVT as percent of sales is underweight relative to industry Multiple product lines have excess capacity Multiple systems and lack of integration driving slow execution and higher operating cost SLOW-TURNING PRODUCT PORTFOLIO UNDERUTILIZED ASSETS COMPLEX INFRASTRUCTURE Over 75% of NA sales are to distributors Multiple product collections are underperforming, and LVT as percent of sales is underweight relative to industry Multiple product lines have excess capacity Over 75% of NA sales are to distributors Only 10% of sales are from products launched in last 24 months Manufacturing portfolio needs to be rebalanced with future outlook AFI relies on multiple custom IT systems in addition to SAP for daily operations Source: Management estimates

WHAT WE WANT YOU TO TAKE AWAY FROM TODAY Large addressable market opportunity in commercial and residential Well positioned in geographic markets and product categories Clear understanding of U.S. performance issues Focused strategy to transform and modernize business AFI will become more agile, faster growing and more profitable

SIMPLIFY Portfolio & Organization 2 STRENGTHEN Capabilities 3 EXPAND Customer Reach 1 FOCUSED STRATEGY TO TRANSFORM & MODERNIZE

EXPAND EXPAND CUSTOMER REACH Add Direct Sales representation and augment the Supply Chain model to service Key Independent Retailers, Commercial National Accounts & Large Flooring Contractors Resource & Grow in the Builder & Multifamily Channel Increase focus and investment with Big Box Retail/National Accounts Optimize the current Distribution Network Penetrate new Commercial verticals such as Hospitality, Corporate/Office and Government Invest in Marketing capabilities to drive demand creation with key growth platforms – digital tool expansion, brand refresh & self-service toolbox

INVESTMENT SIMPLIFY SIMPLIFY & ENHANCE PORTFOLIO Commercial Sheet Residential Tile REFRESH OFFERING Commercial VCT Residential Sheet Commercial LVT Residential LVT INVEST IN OFFERING Coatings Personalization Non-PVC Recycling Acoustics AREAS OF INNOVATION DECREASE Commercial LVT 15% Residential LVT 15% Commercial Sheet 20% Residential Tile 5% Accessories 5% Commercial VCT 30% Residential Sheet 10% MAINTAIN GROW REDUCE COMPLEXITY CURRENT SALES MIX Marketing, Supply Chain, Design & Innovation SKU MIX DIRECTION

SIMPLIFY SIMPLIFY & ENHANCE PORTFOLIO Simplify pricing structure Streamline administrative processes and systems Transition multiple systems to one integrated platform Redeploy back office SG&A to fund Go-to Market Expansion Provide performance expectations to channel partners Digitize Customer interactions Optimize manufacturing footprint Reduce lease costs for corporate HQ Simplify Optimize

TRANFORM & MODERNIZE CAPABILITIES STRENGTHEN Project Management Innovation & Product Development Processes Productivity Transformation Management Office Cross Functional Clear KPI’s Customer Portal One AFI Logistics and Distribution Stage Gate Design 3-Year Pipeline Sustainability Focus on Big Opportunities First Movers Mentality Embed in Culture

PRODUCT INNOVATION STRENGTHEN Customer-focused Innovation

MANAGEMENT ALIGNED FOR SUCCESS Sales growth Gross profit improvement Adj. EBITDA targets Share price targets ANNUAL INCENTIVE LONG-TERM INCENTIVE

WHAT WE WANT YOU TO TAKE AWAY FROM TODAY Large addressable market opportunity in commercial and residential Well positioned in geographic markets and product categories Clear understanding of U.S. performance issues Focused strategy to transform and modernize business AFI will become more agile, faster growing and more profitable

REVENUE DRIVERS Leverage Strength in Commercial Verticals Penetrate Underrepresented Sectors Develop Market-Leading Product Portfolio

GROSS MARGIN IMPROVEMENTS Enhance margin mix through incremental direct sales to larger customers Optimize manufacturing footprint Update pricing approach to reduce complexity Streamline product portfolio Develop enhanced logistics capability, including investment in new distribution facilities

SG&A INVESTMENTS Expand sales force capabilities to drive revenue opportunities Revitalize brand through enhanced marketing Leverage outside resources to modernize systems and processes Drive future operating efficiencies as business modernizes Reduce lease costs for corporate HQ Align incentive structure to drive focus on profitable growth

WORKING CAPITAL AND CAPEX SKU optimization drives reduction of inventory Increase just-in-time inventory investments for key products to support market requirements Additional receivables to support new and existing customer accounts Capital investment to fuel growth opportunities Monetize non-core assets Refinanced credit facility to asset-backed loan to improve flexibility

FINANCIAL PATH FORWARD Reverse sales decline and grow topline Improve gross profit margin Investments and non-recurring 2019 benefits impact 2020 SG&A dollars and margin Adjusted EBITDA dollars and margin decline significantly on a percentage basis in 2020 and grow thereafter Expect free cash flow to be positive in 2022

NEW OPERATING MODEL from to

WHAT WE WANT YOU TO TAKE AWAY FROM TODAY Large addressable market opportunity in commercial and residential Well positioned in geographic markets and product categories Clear understanding of U.S. performance issues Focused strategy to transform and modernize business AFI will become leaner, faster growing and more profitable

APPENDIX

RECONCILIATIONS TO GAAP $ Million Adj EBITDA Three months 12 months   2019 2018 2019 2018 Total Total Total Total Net (Loss) Income ($25.1) ($171.0) ($58.5) ($163.0) Net income disc ops (2.8) 156.1 (10.4) 143.9 Interest expense 1.7 1.9 4.4 4.8 Other (income) & expense 0.6 0.7 1.8 2.9 Taxes 4.6 (4.3) 1.6 (6.0) Operating (loss) income (21.0) (16.6) (61.1) (17.4) Depreciation and amortization 15.5 11.2 50.7 44.7 Business reset 0.5 1.5 32.1 7.5 U.S. pension expense 0.7 0.9 2.7 3.8 Corporate expense -- 4.8 -- 19.0 Adjusted EBITDA (4.3) 1.8 24.4 57.5 Free Cash Flow Three months ended 3/31/19 Three months ended 3/31/18 Three months ended 6/30/19 Three months ended 6/30/18 Three months ended 9/30/2019 Three months ended 9/30/18 Three months ended 12/31/19 Three months ended 12/31/18 Twelve months ended 12/31/19 Twelve months ended 12/31/18 Operating Cash Flow (63.2) (4.4) 29.4 29.0 32.0 (6.8) (4.2) 44.7 (6.0) 62.5 Purchases of property, plant, and equipment (8.6) (10.2) (6.9) (7.2) (7.4) (6.9) (6.0) (11.0) (28.9) (35.3) Free Cash Flow (71.8) (14.6) 22.5 21.8 24.6 (13.7) (10.2) 33.7 (34.9) 27.2 December 31 Note: Figures may not foot due to rounding.