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): May 1, 2017

ARMSTRONG WORLD INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania	1-2116	23-0366390
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)
2500 Columbia Avenue P.O. Box 3001 Lancaster, Pennsylvania		17603
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (717) 397-0611

NA

(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))

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. ◻

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Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On May 1, 2017, Armstrong World Industries, Inc. (the “Company”) issued a press release announcing its first quarter 2017 consolidated 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 “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 May 1, 2017, the Company issued a press release announcing that it will report its first quarter 2017 consolidated financial results via a webcast and conference call on Monday, May 1, 2017 at 11:00 a.m. Eastern Time which can be accessed through the “Investors” section of the Company’s website, www.armstrongceilings.com. During this report, the Company will reference a slide presentation, a copy of which is attached hereto as Exhibit 99.2 and incorporated herein by reference.

The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 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 Act, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

No. 99.1	Press Release of Armstrong World Industries, Inc. dated May 1, 2017
No. 99.2	Earnings Call Presentation First Quarter 2017 dated May 1, 2017

3

SIGNATURES

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 WORLD INDUSTRIES, INC.
By:	/s/ Mark A. Hershey
	Mark A. Hershey
	Senior Vice President, General Counsel, Secretary and Chief Compliance Officer

Date: May 1, 2017

4

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of Armstrong World Industries, Inc. dated May 1, 2017
99.2	Earnings Call Presentation First Quarter 2017 dated May 1, 2017

5

EX-99.1

Exhibit 99.1

Armstrong World Industries Reports

First Quarter 2017 Results

Key Highlights

• Operating income from continuing operations of $63.0 million, up almost 200% over the prior year period

• Global as reported sales growth of 9.7% over the prior year period with all segments contributing to growth

• Americas volume grew high mid-single digits over a strong prior year period

• Repurchased 1.2M shares in Q1 for approximately $50 million

LANCASTER, Pa., May 1, 2017 -- Armstrong World Industries, Inc. (NYSE:AWI), a global leader in the design and manufacture of innovative commercial and residential ceiling, wall and suspension system solutions, today reported financial results for the first quarter.     

First Quarter Results from Continuing Operations

(Amounts in millions except per-share data)	Three Months Ended March 31,
	2017		2016			Change
Net sales	$	315.4	$	287.4			9.7	%
Operating income		63.0		21.6		Favorable
Earnings (loss) from continuing operations		30.8		(7.1	)	Favorable
Diluted earnings (loss) per share	$	0.56	$	(0.13	)	Favorable

Excluding the unfavorable impact from foreign exchange of $2 million, consolidated net sales increased 10.4% compared to the prior year period, driven by higher volumes in theAmericas and Europe (including Russia), Middle East and Africa (“EMEA”). Average sales dollars per unit sold, or average unit value (“AUV”) achievement improved, driven by positive like for like pricing and positive mix in the Americas.

As reported operating income improved over the prior year period, driven by lower separation costs, a decrease in the U.S. pension plan expense due to a longer amortization period as a result of the separation from Armstrong Flooring, Inc. (“AFI”), the margin impact of higher volume and AUV improvement. This improvement was partially offset by higher SG&A expenses and higher manufacturing and input costs. Earnings from continuing operations also benefited from lower interest expense compared to the prior year period.      

“We remain focused on changing the growth trajectory of our business over the long term through our product innovation, best-in-class service and new platforms in the Architectural Specialties category,” said Vic Grizzle, CEO. “Our double digit sales growth this quarter reflects the initial success of those strategic initiatives, as well as improved market activity.”

Additional (non-GAAP*) Financial Metrics from Continuing Operations

(Amounts in millions except per-share data)	Three Months Ended March 31,
	2017		2016			Change
Constant currency sales	$	317	$	287			10.4	%
Adjusted operating income	$	57	$	52			8.7	%
Adjusted net income	$	30	$	28			6.3	%
Adjusted diluted earnings per share	$	0.55	$	0.50			8.4	%
Free cash flow	$	5	$	(7	)	Favorable

(Amounts in millions)	Three Months Ended March 31,
	2017		2016			Change
Adjusted EBITDA
Americas	$	74	$	73			2.5	%
EMEA		1		(1	)	Favorable
Pacific Rim		0		1			(77.5	)%
Unallocated Corporate		-		(2	)		100.0	%
Consolidated Adjusted EBITDA	$	75	$	71			6.7	%

* The Company uses the above non-GAAP adjusted measures, as well as other non-GAAP measures mentioned below, in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods. Adjusted operating income, adjusted EBITDA, adjusted net income, and adjusted EPS exclude the impact of foreign exchange, restructuring charges and related costs, impairments, the non-cash impact of the U.S. pension plan, AFI separation costs and certain other gains and losses. Free cash flow is defined as cash from operations and dividends received from the WAVE joint venture, less expenditures for property and equipment, and is adjusted to remove the impact of cash used or proceeds received for acquisitions and divestitures. The Company believes free cash flow is useful because it provides insight into the amount of cash that the Company has available for discretionary uses, after expenditures for capital commitments and adjustments for acquisitions and divestitures. Adjusted figures are reported in comparable dollars using the budgeted exchange rate for 2017, and are reconciled to the most comparable GAAP measures in tables at the end of this release.    

Adjusted operating income improved by 9% and adjusted EBITDA improved 7% in the first quarter, when compared to the prior year period. Higher volumes globally and improvements in AUV partially offset higher SG&A expenses and higher manufacturing and input costs. Adjusted earnings per share reflects a 39% adjusted tax rate in both the current and prior year periods. Free cash flow improved driven primarily by higher cash earnings.        

First Quarter Segment Highlights

Effective April 1, 2016, the former Building Products operating segment was disaggregated into the following three distinct geographical segments: Americas (including Canada), EMEA and Pacific Rim. The Unallocated Corporate segment historically included assets, liabilities, income and expenses that had not been allocated to the geographical segments, including AFI separation costs.

Americas
(Amounts in millions)	Three Months Ended March 31,
	2017		2016		Change
Total segment net sales (as reported)	$	219.8	$	200.1		9.8	%
Operating income (as reported)	$	67.2	$	56.1		19.8	%
Constant currency sales	$	220	$	201		9.4	%
Adjusted EBITDA	$	74	$	73		2.5	%

Excluding the favorable impact of foreign exchange of approximately $1 million, net sales in the Americas increased 9.4%, driven by high mid-single digit volume growth along with positive mix and positive like for like pricing which drove AUV expansion. The volume growth was over a strong base period and driven by continued strength in the U.S. Commercial channel and Big Box channel inventory builds. On an as reported basis, gross margins and operating income both increased driven by a decrease in the U.S. pension plan expense as a result of the separation from AFI, the margin impact of higher volumes and AUV improvement. The improvement in as reported operating income was partially offset by higher SG&A expenses and higher manufacturing and input costs. Adjusted EBITDA margins contracted due to the timing of certain expenses in manufacturing and SG&A.

EMEA
(Amounts in millions)	Three Months Ended March 31,
	2017			2016			Change
Total segment net sales (as reported)	$	66.6		$	59.6			11.7	%
Operating (loss) (as reported)	$	(3.1	)	$	(4.0	)		22.5	%
Constant currency sales	$	69		$	59			16.2	%
Adjusted EBITDA	$	1		$	(1	)	Favorable

Excluding the unfavorable impact of foreign exchange of approximately $3 million, net sales in EMEA for the first quarter increased 16.2%, driven by broad based volume growth, particularly in Russia and the UK, and AUV improvement. On an as reported basis, operating loss decreased driven by the margin impact of higher volume and AUV improvement which partially offset higher manufacturing and input costs and higher SG&A expenses.

Pacific Rim
(Amounts in millions)	Three Months Ended March 31,
	2017			2016			Change
Total segment net sales (as reported)	$	29.0		$	27.7			4.7	%
Operating (loss) (as reported)	$	(1.1	)	$	(1.3	)		15.4	%
Constant currency sales	$	28		$	27			4.8	%
Adjusted EBITDA	$	0		$	1			(77.5	)%

Net sales in the Pacific Rim for the firstquarterincreased4.8%,excluding the impact of foreign exchange, driven by volume gains. On an as reported basis, operating loss decreaseddue to mix and foreign exchange movements offset by supply side sourcing changes.  

Unallocated Corporate

As a result of the AFI separation on April 1, 2016, the majority of corporate support functions were incorporated into the Americas segment, resulting in the discontinuation of the unallocated corporate reportable segment from a P&L perspective in 2017.  

On an as reported basis, unallocated corporate had zero expenses in the first quarter, representing a decrease of $29.2 million from the prior year period.

Market Outlook and 2017 Guidance ⁽¹⁾

“We are pleased by our strong start to the year, with robust sales growth and gross margin expansion demonstrating that our growth initiatives are gaining traction,” said Brian MacNeal, CFO. “While the timing of certain manufacturing and SG&A expenses resulted in temporary adjusted EBITDA margin contraction in the quarter, we are reaffirming our full year guidance of 5%-7% revenue growth and 10%-14% adjusted EBITDA growth versus the prior year.”

⁽¹⁾ Guidance metrics are presented using 2017 budgeted foreign exchange rates.  Adjusted EPS guidance for 2017 is calculated based on an adjusted effective tax rate of 39%.

Earnings Webcast

Management will host a live Internet broadcast beginning at 11:00 a.m. Eastern time today, to discuss first quarter results. This event will be broadcast live on the Company's website. To access the call and accompanying slide presentation, go to www.armstrongceilings.com and click Investors. The replay of this event will also be available on the Company's website for up to one year after the date of the call.

Uncertainties Affecting Forward-Looking Statements

Disclosures in this release, including without limitation, those relating to future financial results, market conditions and guidance, 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 in the “Risk Factors” and “Management’s Discussion and Analysis” section of our report on Forms 10-K and 10-Q filed with the U.S. Securities and Exchange Commission (“SEC”). 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.

About Armstrong and Additional Information

More details on the Company’s performance can be found in its quarterly report on Form 10-Q for the quarter ended March 31, 2017 that the Company expects to file with the SEC today.

Armstrong World Industries, Inc. (AWI) is a global leader in the design and manufacture of innovative commercial and residential ceiling, wall and suspension system solutions. With over 3,800 employees and fiscal 2016 revenues from ceiling operations in excess of $1.2 billion,AWI has a global manufacturing network of 26 facilities, including 9 plants dedicated to its WAVE joint venture. On April 1, 2016, AWI completed the separation of its legacy flooring business that now operates as Armstrong Flooring, Inc., an independent, publicly-traded company. For more information, visit www.armstrongceilings.com.

Additional forward looking non-GAAP metrics are available on the Company’s website at www.armstrongceilings.com under the Investors tab. The website is not part of this release and references to our website address in this release are intended to be inactive textual references only.

As Reported Financial Highlights

FINANCIAL HIGHLIGHTS

Armstrong World Industries, Inc. and Subsidiaries

(amounts in millions, except for per-share amounts, quarterly data is unaudited)

	Three Months Ended March 31,
	2017			2016
Net sales	$	315.4		$	287.4
Cost of goods sold		216.1			203.1
Selling, general and administrative expenses		54.6			53.7
Separation costs		-			27.1
Equity earnings from joint venture		(18.3	)		(18.1	)
Operating income		63.0			21.6
Interest expense		9.2			21.9
Other non-operating expense		1.8			-
Other non-operating (income)		(3.4	)		(5.2	)
Earnings from continuing operations before income taxes		55.4			4.9
Income tax expense		24.6			12.0
Earnings (loss) from continuing operations	$	30.8		$	(7.1	)
Net (loss) from discontinued operations, net of tax expense    of $ -, and $ 0.1		-			(4.5	)
(Loss) gain from disposal of discontinued business, net of tax expense     (benefit) of $0.3 and ($1.8)		(0.4	)		1.7
Net (loss) from discontinued operations		(0.4	)		(2.8	)
Net earnings (loss)	$	30.4		$	(9.9	)
Other comprehensive income, net of tax:
Foreign currency translation adjustments		11.1			1.4
Derivative gain		0.1			1.6
Pension and postretirement adjustments		2.5			7.8
Total other comprehensive income		13.7			10.8
Total comprehensive income	$	44.1		$	0.9
Earnings (loss) per share of common stock, continuing operations:
Basic	$	0.57		$	(0.13	)
Diluted	$	0.56		$	(0.13	)
(Loss) per share of common stock, discontinued operations:
Basic	$	(0.01	)	$	(0.05	)
Diluted	$	(0.01	)	$	(0.05	)
Net earnings (loss) per share of common stock:
Basic	$	0.56		$	(0.18	)
Diluted	$	0.56		$	(0.18	)
Average number of common shares outstanding:
Basic		54.1			55.6
Diluted		54.5			55.6

SEGMENT RESULTS

Armstrong World Industries, Inc. and Subsidiaries

(amounts in millions)

(Unaudited)

	Three Months Ended March 31,
	2017			2016
Net Sales
Americas	$	219.8		$	200.1
EMEA		66.6			59.6
Pacific Rim		29.0			27.7
Total net sales	$	315.4		$	287.4
Operating Income (Loss)
Americas	$	67.2		$	56.1
EMEA		(3.1	)		(4.0	)
Pacific Rim		(1.1	)		(1.3	)
Unallocated Corporate (expense)		-			(29.2	)
Total Operating Income	$	63.0		$	21.6

Selected Balance Sheet Information

(amounts in millions)

(Unaudited)

	March 31, 2017		December 31, 2016
Assets
Current assets	$	353.5	$	406.2
Property, plant and equipment, net		689.2		669.6
Other noncurrent assets		715.1		682.2
Total assets	$	1,757.8	$	1,758.0
Liabilities and shareholders’ equity
Current liabilities	$	221.1	$	224.1
Noncurrent liabilities		1,265.5		1,267.5
Equity		271.2		266.4
Total liabilities and shareholders’ equity	$	1,757.8	$	1,758.0

Selected Cash Flow Information

(amounts in millions)

(Unaudited)

	Three Months Ended March 31,
	2017			2016
Net earnings (loss)	$	30.4		$	(9.9	)
Other adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities		24.0			53.4
Changes in operating assets and liabilities, net	$	(43.8	)	$	(108.5	)
Net cash provided by (used for) operating activities		10.6			(65.0	)
Net cash (used for) investing activities		(37.5	)		(10.3	)
Net cash (used for) financing activities		(36.1	)		(20.1	)
Effect of exchange rate changes on cash and cash equivalents		2.1			0.4
Net (decrease) in cash and cash equivalents		(60.9	)		(95.0	)
Cash and cash equivalents at beginning of period		141.9			244.8
Cash and cash equivalents at end of period	$	81.0		$	149.8
Cash and cash equivalents at end of period of discontinued operations		-			9.1
Cash and cash equivalents at end of period of continuing operations	$	81.0		$	140.7

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

(Amounts in millions, except per share data)

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 foreign exchange, restructuring charges and related costs, impairments, the non-cash impact of the U.S. pension plan, separation costs and certain other gains and losses. Free cash flow is defined as cash from operations and dividends received from the WAVE joint venture, less expenditures for property and equipment, and is adjusted to remove the impact of cash used or proceeds received for acquisitions and divestitures. The Company believes free cash flow is useful because it provides insight into the amount of cash that the Company has available for discretionary uses, after expenditures for capital commitments and adjustments for acquisitions and divestitures. Adjusted figures are reported in comparable dollars using the budgeted exchange rate for 2017. The Company uses these adjusted performance measures in managing the business, including communications with its Board of Directors and employees, and believes that they provide users of this financial information with meaningful comparisons of operating performance between current results and results in prior periods. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance, as well as prospects for its future performance. A reconciliation of these adjustments 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.

CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS

	Three Months Ended March 31,
	2017			2016
Earnings (Loss) from continuing operations, Reported	$	31		$	(7	)
Tax expense		(24	)		(12	)
Earnings before tax, Reported	$	55		$	5
Interest/other expense**		(8	)		(17	)
Operating Income, Reported	$	63		$	22
Non-cash impact of U.S. pension		(6	)		3
Separation expenses		-			27
Cost reduction initiatives		(1	)		-
Foreign exchange impact		1			-
Operating Income, Adjusted	$	57		$	52
D&A*		(18	)		(19	)
Adjusted EBITDA***	$	75		$	71

* Excludes accelerated depreciation associated with cost reduction initiatives reflected below. Actual D&A as reported is$18.9 million for the three months ended March 31, 2017 and $18.8 million for the three months ended March 31, 2016

** Reported results include $10.7 million of interest expense recorded in the first quarter of 2016 related to the settlement of interest rate swaps incurred in connection with the Company’s refinancing of its credit facility

*** Includes $2 million of unallocated Corporate expense in the first quarter of 2016 related to the separation of AFI

Americas

	Three Months Ended March 31,
	2017			2016
Operating Income, Reported	$	67		$	56
Non-cash impact of U.S. pension		(6	)		3
Operating Income, Adjusted	$	61		$	59
D&A		(13	)		(14	)
Adjusted EBITDA	$	74		$	73

EMEA

	Three Months Ended March 31,
	2017			2016
Operating (Loss), Reported	$	(3	)	$	(4	)
Operating (Loss), Adjusted	$	(3	)	$	(4	)
D&A		(4	)		(3	)
Adjusted EBITDA	$	1		$	(1	)

Pacific Rim

	Three Months Ended March 31,
	2017			2016
Operating (Loss), Reported	$	(1	)	$	(1	)
Cost reduction initiatives		(1	)		-
Foreign exchange impact		1			-
Operating (Loss), Adjusted	$	(1	)	$	(1	)
D&A		(1	)		(2	)
Adjusted EBITDA	$	0		$	1

Unallocated Corporate

	Three Months Ended March 31,
	2017		2016
Operating (Loss), Reported	$	-	$	(29	)
Separation expenses		-		27
Operating (Loss), Adjusted	$	-	$	(2	)
D&A		-		-
Adjusted EBITDA	$	-	$	(2	)

Free Cash Flow

	Three Months Ended March 31,
	2017			2016
Net cash provided by (used for) operations	$	11		$	(65	)
Less: net cash (used for) investing		(38	)		(10	)
Add back (subtract) adjustments to reconcile free cash flow:
Acquisitions		31			-
Separation payments		-			15
Cash flows attributable to AFI		-			53
Other		1			-
Free Cash Flow	$	5		$	(7	)

Consolidated Results From Continuing Operations

	Three Months Ended March 31,
	2017					2016
	Total			Per Diluted Share		Total			Per Diluted Share
Earnings (Loss) from continuing operations, Reported	$	31		$	0.56	$	(7	)	$	(0.13	)
Pre-tax adjustment items*		-					(38	)
Non-cash impact of U.S. Pension		6					(3	)
Reversal of adjusted tax expense @ 39% for 2017 and  2016		19					18
Ordinary tax		(21	)				(1	)
Unbenefitted foreign losses		(3	)				(4	)
Separation costs		-					(9	)
Foreign tax credits		1					-
State Audit Adjustment		-					2
Tax adjustment items		(1	)				-
Earnings from continuing operations, Adjusted	$	30		$	0.55	$	28		$	0.50
Adjusted tax (expense) @ 39% for 2017 and 2016		(19	)				(18	)
Earnings Before Taxes, Adjusted	$	49				$	46
Interest and other non-operating (expense)*		(8	)				(7	)
Operating Income, Adjusted	$	57				$	52
D&A		(18	)				(19	)
Adjusted EBITDA**	$	75				$	71

* Adjusted results exclude $10.7 million of interest expense recorded in the first quarter of 2016 related to the settlement of interest rate swaps incurred in connection with the Company’s refinancing of its credit facility

** Includes $2 million of unallocated Corporate expense in the first quarter of 2016 related to the separation of AFI

Source: Armstrong World Industries

EX-99.2

Earnings Call Presentation 1st Quarter 2017 May 1, 2017 Exhibit 99.2

Our disclosures in this presentation, including without limitation, those relating to future financial results market conditions and guidance, and in our other public documents and comments contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. 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 may affect our ability to achieve the projected performance is included in the “Risk Factors” and “Management’s Discussion and Analysis” sections of our reports on Forms 10-K and 10-Q filed with the U.S. Securities and Exchange Commission (“SEC”). 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. In addition, we will be referring to non-GAAP financial measures within the meaning of SEC Regulation G. A reconciliation of the differences between these measures with the most directly comparable financial measures calculated in accordance with GAAP are included within this presentation and available on the Investor Relations page of our website at www.armstrongceilings.com. The guidance in this presentation is only effective as of the date given, May 1, 2017, and will not be updated or affirmed unless and until we publicly announce updated or affirmed guidance. Safe Harbor Statement

All figures throughout the presentation are in $ millions unless otherwise noted. Figures may not add due to rounding. When reporting our financial results within this presentation, we make several adjustments. Management uses the non-GAAP measures below in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods. As reported results will be footnoted throughout the presentation. Basis of Presentation Explanation We report in comparable dollars to remove the effects of currency translation on the P&L. The budgeted exchange rate for 2017 is used for all currency translations in 2017 and prior years. Guidance is presented using the 2017 budgeted exchange rate for the year. We remove the impact of discrete expenses and income. Examples include plant closures, restructuring actions, separation costs and other large unusual items. We also remove the non-cash impact of our U.S. pension plan. Taxes for normalized Net Income and EPS are calculated using a constant 39% for 2017 guidance, and 2017 and 2016 results, which are based on the expected long term tax rate. Results throughout this presentation are presented on a continuing operations basis. What Items Are Adjusted Comparable Dollars Other Adjustments Net Sales Yes No Gross Profit Yes Yes SG&A Expense Yes Yes Equity Earnings Yes Yes Operating Income Yes Yes Net Income Yes Yes Cash Flow No Yes Return on Capital Yes Yes EBITDA Yes Yes

Consolidated Company Key Metrics - First Quarter 2017 As reported Net Sales: $315 million in 2017 and $287 million in 2016 As reported Operating Income: $63 million in 2017 and $22 million in 2016 As reported EPS: $0.56 in 2017 and ($0.13) in 2016 Includes $2 million of unallocated Corporate expenses in the first quarter of 2016 related to the separation of Armstrong Flooring, Inc. (“AFI”) 2017 2016 Variance Net Sales (1) $317.42899999999997 $287.45699999999999 0.10426602935395549 Operating Income (2) $56.5 $52 8.7% % of Sales 0.17799255896594202 0.18089662105984547 -30 EBITDA 75.375 64 70.664000000000001 6.7% % of Sales 0.23745467490367927 0.2458245928956331 -90 adjustment Earnings Per Share (3) $0.54732110091743114 $0.50467625899280577 8.4% Free Cash Flow 5 -7 Favorable Net Debt 807 828.40000000000009 -21.400000000000091

EBITDA Bridge – First Quarter 2017 vs. PY $12 $5 ($4) ($5) ($4)

Free Cash Flow Bridge – First Quarter 2017 vs. PY(1) $14 Excludes payments related to the separation from AFI in the first quarter of 2016 and payments made for the acquisition of Tectum in the first quarter of 2017.

Excluding the favorable impact of foreign exchange of $1 million, net sales increased 9.4% due to strength in the U.S. Commercial channel and Big Box inventory builds. Volumes grew high mid-single digits over a strong prior year base period. Average unit value (“AUV”) achievement improved from both strong mix performance and positive “like for like” pricing. Americas First Quarter Results Volume accelerated 600 bps sequentially over the fourth quarter and grew high mid-single digits over a strong prior year base period Key Highlights Dollar amounts on the page are shown in millions 2016 Q1 Adjusted EBITDA $72.522000000000006 Volume 9 Driven by strength in the U.S. Commercial channel and inventory builds in the Big Box channel AUV 3 Positive like for like pricing and continued mix up to higher end products Manufacturing & Input Costs -4 Driven by the timing of expenses (~$2M), inflation and costs to support the volume growth SG&A -7 Driven by the timing of expenses (~$3M), inclusion of Tectum (~$2M) and investments in selling (~$2M) 2017 Q1 Adjusted EBITDA $74.364000000000004

Excluding the unfavorable impact of foreign exchange of $3 million, net sales increased 16.2%, driven mainly by broad based sales growth, particularly in Russia and the UK, along with AUV improvement. EMEA First Quarter Results Adjusted EBITDA margins improved 200 bps driven by higher volumes and improved AUV achievement Key Highlights Dollar amounts on the page are shown in millions 2016 Q1 Adjusted EBITDA $-0.503 Volume 3 Margin impact of higher broad based sales driven by Russia and the UK AUV 2 Like for like pricing was positive Manufacturing & Input Costs -2 Inventory valuations and startup costs due to sourcing strategy changes SG&A -1 Prior year cost out actions 2017 Q1 Adjusted EBITDA $0.78100000000000003

Net sales increased 4.8% driven by India and Australia, which more than offset softness in China. Pacific Rim First Quarter Results Strength in India and Australia drove nearly 5% sales growth Key Highlights Dollar amounts on the page are shown in millions 2016 Q1 Adjusted EBITDA $0.82399999999999995 Manufacturing & Input Costs -1 Sourcing strategy changes 2017 Q1 Adjusted EBITDA $0.185

2017 Guidance $2.60 – $2.70 12% – 16% YoY Growth $2.32 Adjusted EBITDA(2) Adjusted EPS(3) Free Cash Flow(4) Revenue(1) $1,230 $317 $1,290 – $1,320 5% – 7% YoY Growth $350 – $360 10% – 14% YoY Growth $130 – $145 11% – 24% YoY Growth $117 Note: Dollars in millions except per share values As-reported revenue of $1,235 million in 2016. 2017 As-reported sales expected to have (1%) - (3%) FX headwind 2016 base excludes $4M of pre-separation corporate expenses and pension expense; 2017 excludes pension expense 2016 base excludes $4M of pre-separation corporate expenses and pension expense; 2017 excludes pension expense. As reported expected earnings per share in 2017 of $2.75- $2.85 impacted by an expected as reported effective tax rate of ~41%. No FX adjustment. See slide 12 for more details. 2016 excludes separation costs and other extraordinary expenses. Cash flow from operations includes dividends received from the WAVE JV. 3% – 7% North America volume growth 0% – 4% International volume growth 2% – 4% average unit value increase 3% – 4% earnings contribution from AUV and cost savings over inflation Increased sales and marketing investments as a result of the Tectum acquisition and expansion of total solutions selling capabilities SG&A as a % of sales remains flat $35 million of interest expense Normalized 39% effective tax rate 56 million average diluted shares outstanding Cash tax rate 30% – 35% $240 million cash flow from operations $100 million of total capital expenditures Excludes cash paid for Tectum 2016 Constant Currency Results 2017 Constant Currency Guidance

Appendix

Q1 2017 vs. PY - Reported Net Income to Adjusted EBITDA CONSOLIDATED AMERICAS EMEA PACIFIC RIM CORPORATE rounding factor 2017 2016 V 2017 2016 V 2017 2016 V 2017 2016 V 2017 2016 V Net Income - As Reported $30.799999999999983 $-7.1000000000000183 $37.9 0 0 0 0 0 0 0 0 0 0 0 0 Tax expense $-24 $-12 $-12 0 0 0 0 0 0 0 0 0 0 0 0 EBT - As Reported $55.399999999999984 $4.8999999999999817 $50 0 0 0 0 0 0 0 0 0 0 0 0 Interest/Other (Expense) $-8 $-17 $9 0 0 0 0 0 0 0 0 0 0 0 0 Operating Income (Loss) – As Reported $62.999999999999986 $21.59999999999998 $41.400000000000006 $67.2 $56.1 $11.100000000000001 $-3.1 $-4 $0.89999999999999991 $-1.1000000000000001 $-1.3 $0.19999999999999996 $0 $-29.2 $29.2 Non-cash Impact of U.S. Pension $-6 $3.2 $-9.1999999999999993 $-6 $3.2 $-9.1999999999999993 0 0 0 0 0 0 0 0 0 Separation Expenses $0 $27 $-27 0 0 0 0 0 0 0 0 0 $0 $27 $-27 Cost Reduction Initiatives $-1 $0 $-1 0 0 0 0 0 0 $-1 $0 $-1 0 0 0 Foreign Exchange Movements $1 $0 $1 0 0 0 0 0 0 $1 $0 $1 0 0 0 Operating Income (Loss) – Adjusted $56.5 $52 $4.5 $61.2 $59.45 $1.75 $-3.1 $-4.3 $1.1999999999999997 $-1.2 $-1.2 $0 $0 $-2 $2 0.15 Depreciation and Amortization $-18 $-18.664000000000001 $0.66400000000000148 $-13.164000000000001 $-14 $0.83599999999999852 $-3.8810000000000002 $-3 $-0.88100000000000023 $-1.385 $-2.024 $0.63900000000000001 $0 $0 $0 EBITDA – Adjusted $75.375 $70.664000000000001 $4 $74.364000000000004 $72.522000000000006 $1 $0.78100000000000003 $-0.503 $2 $0.185 $0.82399999999999995 $-0.63900000000000001 $0 $-2 $2

Free Cash Flow Reconciliation Free cash flow is defined as cash from operations and dividends received from the WAVE joint venture, less expenditures for property and equipment, and is adjusted to remove the impact of cash used or proceeds received for acquisitions and divestitures. The Company believes free cash flow is useful because it provides insight into the amount of cash that the Company has available for discretionary uses, after expenditures for capital commitments and adjustments for acquisitions and divestitures. 2017 2016 As Reported Net cash provided by (used for) operating activities $10.599999999999993 $-65.000000000000014 As Reported Net cash (used for) investing activities $-37.5 $-10.3 Subtotal $-26.900000000000006 $-75.300000000000011 Acquisitions $31 - Separation Payments - $15 Cash flows attributable to AFI - $53 Other $1 - Free Cash Flow (1) $5.0999999999999943 $-7.3000000000000114

Consolidated Results See earnings press release and 10-Q for additional detail on comparability adjustments. See slide 12 for more details. Eliminates impact of foreign exchange movements First quarter 2016 adjusted EPS calculation excludes the one time impact of $10.7M for charges to settle interest rate swaps due to separation refinancing First Quarter 2017 Reported Comparability(1) Adjustments FX(2) Adj 2017 Adjusted 2016 Reported Comparability(1) Adjustments FX(2) Adj 2016 Adjusted Net Sales 315.39999999999998 - 2 317.42899999999997 287.39999999999998 - - 287.45699999999999 Operating Income 62.999999999999986 -7 1 56.5 21.59999999999998 30 - 52 EPS (3) $0.56000000000000005 $-0.02 $0.01 $0.54732110091743114 $-0.13 $0.63 - $0.50467625899280577 Hide Full Year data in Q1