ARMSTRONG WORLD INDUSTRIES INC

Condensed Consolidated Statements of Earnings and Comprehensive Income

(amounts in millions, except per share data)

Condensed Consolidated Balance Sheets

(amounts in millions, except share and per share data)

Condensed Consolidated Statements of Shareholders’ Equity

(amounts in millions, except share and per share data)

Condensed Consolidated Statements of Cash Flows

(amounts in millions)

NOTE 1. BUSINESS AND BASIS OF PRESENTATION

Armstrong World Industries, Inc. (“AWI”) is a Pennsylvania corporation incorporated in 1891. When we refer to “AWI,” the “Company,” “we,” “our” and “us” in these notes, we are referring to AWI and its subsidiaries.

Except as disclosed in this note, the accounting policies used in preparing the Condensed Consolidated Financial Statements in this Form 10-Q are the same as those used in preparing the Consolidated Financial Statements for the year ended December 31, 2025. These statements should therefore be read in conjunction with the Consolidated Financial Statements and Notes that are included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025. In the opinion of management, all adjustments of a normal recurring nature have been included to provide a fair statement of the results for the reporting periods presented. Operating results for the third quarter and first nine months of 2026 and 2025 included in this report are unaudited. Quarterly results are not necessarily indicative of annual earnings, primarily due to the different level of sales in each quarter of the year and the possibility of changes in general economic conditions.

These Condensed Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles. The statements include management estimates and judgments, where appropriate. Management utilizes estimates to record many items, including certain asset values, contingent purchase price liabilities, allowances for credit losses, inventory obsolescence and lower of cost and net realizable value charges, warranty reserves, workers’ compensation, general, environmental and other claims, and income taxes. When preparing an estimate, management determines the amount based upon the consideration of relevant information and may confer with outside parties, including external counsel. Actual results may differ from these estimates.

Acquisitions

In February 2026, we acquired all of the issued and outstanding shares of Event Scape Inc. and Eventscape U.S. Holdings Inc. (collectively, “Eventscape”), headquartered in Toronto, Ontario, Canada. Eventscape is a designer, manufacturer and installer of ceilings, walls and facades made of a broad range of materials. The operations, assets and liabilities of Eventscape are included in our Architectural Specialties segment.

In December 2025, we acquired all of the issued and outstanding stock of FGM-Parallel LLC (“Parallel”), based in Englewood, Colorado. Parallel is a designer and manufacturer of extruded aluminum products primarily used in exterior architectural applications. The operations, assets and liabilities of Parallel are included in our Architectural Specialties segment.

In September 2025, we acquired all of the issued and outstanding shares of Geometrik Manufacturing, Inc. (“Geometrik”), based in Kelowna, British Columbia, Canada. Geometrik is a designer and manufacturer of wood acoustical ceiling and wall systems. The operations, assets and liabilities of Geometrik are included in our Architectural Specialties segment.

Recently Adopted Accounting Standards

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, “Financial Instruments - Credit Losses,” which simplifies the application of the current expected credit loss model by providing a practical expedient and accounting policy election permitting entities to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when measuring credit losses on current accounts receivable and current contract assets. Our prospective adoption of this standard on January 1, 2026 had no impact on our disclosures and no material impact on our results of operations, cash flows and financial condition.

Recently Issued Accounting Standards

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,” which expands disclosure of significant costs and expenses. This ASU requires expanded disclosures of significant costs and expenditures within cost of goods sold and selling, general and administrative (“SG&A”) expenses, including amounts of inventory purchased, employee compensation, depreciation, amortization and selling expenses. This ASU also requires expanded qualitative disclosures, including a description of selling expenses and a description of non-disaggregated expenses. This guidance is effective for annual periods beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We expect this ASU to impact our disclosures, with no impact on our results of operations, cash flows and financial condition.

In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software,” which modernizes and clarifies the threshold entities apply to begin capitalizing development costs for internal-use software. This guidance is effective for interim and annual periods beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impact the adoption of this ASU will have on our results of operations, cash flows and financial condition.

In December 2025, the FASB issued ASU 2025-10, “Government Grants - Accounting for Government Grants Received by Business Entities,” which provides authoritative guidance on the recognition, measurement, presentation and disclosure of government grants received by an entity. This guidance clarifies that grants related to an asset or to income will be recognized when it is probable that an entity will comply with the conditions attached to the grant, the grant will be received and the related expenses that the grant is intended to compensate have been incurred. For grants that relate to an asset, entities can elect a deferred income approach or a cost accumulation approach to recognize the grant. This guidance is effective for interim and annual periods beginning after December 15, 2028. Early adoption is permitted. We are evaluating the impact the adoption of this ASU will have on our results of operations, cash flows and financial condition.

In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations,” which establishes new guidance for the recognition, measurement, presentation and disclosure of environmental credits and related obligations. This guidance is effective for interim and annual periods beginning after December 15, 2027. Early adoption is permitted. We are evaluating the impact the adoption of this ASU will have on our results of operations, cash flows and financial condition.

NOTE 2. SEGMENT RESULTS

Our operating segments are as follows: Mineral Fiber, Architectural Specialties and Unallocated Corporate. Our Mineral Fiber and Architectural Specialties segment net sales represent the product-based group offerings we sell to external customers.

Our Chief Operating Decision Maker (“CODM”) is our President and Chief Executive Officer. Effective April 1, 2026, our President and Chief Executive Officer (“CEO”), Victor Grizzle, transitioned to Executive Chair of our Board of Directors, and Mark Hershey, formerly our Senior Vice President and Chief Operating Officer, succeeded Victor Grizzle as President and CEO.

Segment operating income (loss) is the measure of segment profit or loss reviewed by the CODM. The following tables are presented at the level of disaggregation regularly reviewed by the CODM to evaluate operating performance and allocate resources to segments:

During the third quarter of 2025, we sold a parcel of land at a Mineral Fiber plant for total proceeds of $1.0 million, with a $0.9 million gain recorded upon sale. The impact of the transaction was recorded within (gain) on sales of fixed assets, net on our Condensed Consolidated Statements of Earnings and Comprehensive Income.

The following table reconciles our total segment operating income to earnings before income taxes. These items are only measured and managed on a consolidated basis:

The following tables present balance sheet information by segment:

NOTE 3. REVENUE

Disaggregation of Revenues

Our Mineral Fiber and Architectural Specialties operating segments manufacture and sell interior and exterior architectural applications including ceilings, specialty walls and exterior metal solutions (primarily mineral fiber, fiberglass, metal, felt, architectural resin and glass, wood, wood fiber, and glass-reinforced-gypsum) throughout the Americas. We disaggregate revenue based on our product-based segments and major customer channels, as they represent the most appropriate depiction of how the nature, amount and timing of revenues and cash flows are affected by economic factors. Net sales by major customer channel are as follows:

Distributors – represents net sales to commercial building materials distributors who resell our products to contractors, subcontractors’ alliances, large architect and design firms, and major facility owners. Geographically, this category includes sales throughout the U.S., Canada, and Latin America.

Home centers – represents net sales to home center customers who resell our products through retail outlets. This category includes sales primarily to U.S. customers.

Direct customers – represents net sales to contractors, subcontractors, and large architect and design firms. This category includes sales primarily to U.S. customers.

Other – represents net sales to independent retailers and certain national account customers, including wholesalers who resell our products to dealers who service builders, and maintenance, repair and operating supply (“MRO”) companies. This category also includes sales to online customers and original product manufacturers. Geographically, this category includes sales throughout the U.S., Canada, and Latin America.

The following tables present net sales by major customer channel within the Mineral Fiber and Architectural Specialties segments for thethree and nine months ended September 30, 2026 and 2025:

NOTE 4. ACQUISITIONS

Eventscape

In February 2026, we acquired the issued and outstanding shares of Eventscape for $64.6 million, net of $1.3 million of cash acquired, plus additional contingent consideration payable upon the achievement of certain future performance objectives in 2030 not to exceed $7.5 million. The purchase price is subject to customary post-closing adjustments for working capital. We, with the assistance of an independent, third-party valuation specialist, utilized a Monte Carlo simulation and determined the estimated fair value of the contingent consideration was $0.4 million as of the acquisition date. Excluding cash acquired and contingent consideration payable, the total fair value of tangible assets acquired, less liabilities assumed, was $3.1 million. The fair value of significant classes of non-cash tangible assets acquired and liabilities assumed included accounts receivable of $12.5 million, operating ROU assets and lease liabilities of $5.5 million, and accounts payable and accrued liabilities of $11.3 million. The total fair value of identifiable intangible assets acquired was $19.8 million, resulting in $42.1 million of goodwill. Identified intangible assets consist primarily of amortizable trademarks of $11.7 million, backlog of $3.9 million and customer relationships of $3.7 million, which are being amortized over a weighted-average life of 15 years,2 years and 6 years, respectively.

Valuations for assets acquired and liabilities assumed are based on preliminary estimates that are subject to revisions and may result in adjustments to preliminary amounts as valuations are finalized.

Parallel

In December 2025, we acquired the issued and outstanding stock of Parallel for $7.3 million, net of $0.6 million of cash acquired. Excluding cash acquired, the total fair value of tangible assets acquired, less liabilities assumed, was $2.4 million. The fair value of significant classes of non-cash tangible assets acquired and liabilities assumed included inventory of $1.1 million, property, plant and equipment of $1.8 million, and operating ROU assets and lease liabilities of $1.1 million. The total fair value of identifiable intangible assets acquired was $2.1 million, resulting in $2.8 million of goodwill. Identified intangible assets consist primarily of amortizable trademarks of $0.9 million and customer relationships of $0.8 million, which are being amortized over a weighted-average life of 15 years and 6 years, respectively.

Valuations for assets acquired and liabilities assumed are based on preliminary estimates that are subject to revisions and may result in adjustments to preliminary amounts as valuations are finalized.

Geometrik

In September 2025, we acquired the issued and outstanding shares of Geometrik for $7.7 million, plus additional contingent consideration payable upon the achievement of certain future performance objectivesin 2027 and 2028 not to exceed $1.5 million. We, with the assistance of an independent, third-party valuation specialist, utilized a Monte Carlo simulation and determined the estimated fair value of the contingent consideration was $0.3 million as of the acquisition date. Excluding cash acquired and contingent consideration payable, the total fair value of tangible assets acquired, less liabilities assumed, was $1.4 million. The fair value of significant classes of non-cash tangible assets acquired and liabilities assumed included accounts receivable of $0.5 million, inventory of $0.5 million, property, plant and equipment of $1.6 million, operating ROU assets and lease liabilities of $3.8 million and accounts payable and accrued liabilities of $1.3 million. The total fair value of identifiable intangible assets acquired was $1.4 million, resulting in $5.2 million of goodwill. Identified intangible assets consist primarily of amortizable trademarks of $0.9 million and backlog of $0.3 million, which are being amortized over a weighted-average life of 15 years and 1 year, respectively.

Consolidated Financial Information

Goodwill from the Eventscape, Parallel and Geometrik acquisitions relates to many factors, including the technical competencies and capabilities of the acquired workforce and our strategic intent to integrate and leverage those competencies and capabilities to advance and expand our portfolio of solutions and offerings. The acquired goodwill associated with the Parallel acquisition is deductible for tax purposes.

For the three and nine months ended September 30, 2026, net sales of $8.2 million and $25.1 million, respectively, from Eventscape, Parallel and Geometrik were included in our Condensed Consolidated Statements of Earnings and Comprehensive Income. For the three and nine months ended September 30, 2026, operating losses of $2.1 million and $4.6 million, including $2.0 million and $3.0 million of depreciation and amortization, respectively, from Eventscape, Parallel and Geometrik were included in our Condensed Consolidated Statements of Earnings and Comprehensive Income. The Eventscape, Parallel and Geometrik acquisitions had no material impact on our Condensed Consolidated Statements of Earnings and Comprehensive Income for the three and nine months ended September 30, 2025.

Pro forma Financial Information

The following table summarizes aggregate unaudited as reported and pro forma information assuming the acquisitions of Eventscape, Parallel and Geometrik had occurred on January 1, 2025. The unaudited pro forma results include the depreciation and amortization associated with the acquired assets. The unaudited pro forma results do not include any expected benefits from the Eventscape, Parallel and Geometrik acquisitions. Accordingly, the unaudited pro forma results are not necessarily indicative of either future results of operations or results that might have been achieved had the acquisitions been consummated as of January 1, 2025.

NOTE 5. ACCOUNTS AND NOTES RECEIVABLE

We sell our products to select, pre-approved customers whose businesses are affected by changes in economic and market conditions. We consider these factors and the financial condition of each customer when establishing our allowance for credit losses.

NOTE 6. INVENTORIES

NOTE 7. OTHER CURRENT ASSETS

NOTE 8. INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Investments in unconsolidated affiliates include our 50% equity interest in Worthington Armstrong Venture (“WAVE”), our joint venture with Worthington Enterprises, Inc., and our 14.0% equity interest in Overcast Innovations LLC (“Overcast”), our strategic partnership and equity investment entered into with McKinstry Essention, LLC. Both the WAVE joint venture and Overcast investment are reflected within our Condensed Consolidated Financial Statements using the equity method of accounting. WAVE is reflected as a component of our Mineral Fiber segment and Overcast is included as a component of our Unallocated Corporate segment.

The following table presents equity (earnings) losses from our unconsolidated affiliates for thethree and nine months ended September 30, 2026 and 2025:

The following table presents condensed financial statement data for WAVE:

NOTE 9. GOODWILL AND INTANGIBLE ASSETS

The following table presents amounts related to our goodwill and intangible assets as of September 30, 2026 and December 31, 2025:

As of September 30, 2026 and December 31, 2025, goodwill totaled $256.4 million and $217.6 million, respectively, within our Architectural Specialties segment, and $0.2 million within our Mineral Fiber segment for the same periods. The increase in goodwill as of September 30, 2026 compared to December 31, 2025 was due to the acquisition of Eventscape, partially offset by changes in the purchase price allocations for Parallel and Geometrik and foreign exchange movements.

The following table presents the amortization expense related to our intangible assets for thethree and nine months ended September 30, 2026 and 2025:

NOTE 10. OTHER NON-CURRENT ASSETS

NOTE 11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

NOTE 12. INCOME TAX EXPENSE

The following table presents our effective tax rate for thethree and nine months ended September 30, 2026 and 2025:

The increase in the effective tax rate for the third quarter and the first nine months of 2026 compared to the same periods in 2025 were primarily due to the absence of prior-year benefits recognized from statute closures and federal investment tax credits.

It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. However, an estimate of the range of reasonably possible outcomes cannot be reliably made at this time. Changes to unrecognized tax benefits could result from the expiration of statutes of limitations, the completion of ongoing examinations, or other unforeseen circumstances.

NOTE 13. DEBT

Our long-term debt is comprised of borrowings outstanding under our $910.6 million variable rate amended senior secured credit facility, which is comprised of a $500.0 million revolving credit facility (with a $150.0 million sublimit for letters of credit) and a $410.6 million Term Loan A. As of September 30, 2026 and December 31, 2025, the principal balance of our Term Loan A was $402.9 million and $410.6 million, respectively. As of September 30, 2026, borrowings outstanding under our revolving credit facility were $70.0 million. As of December 31, 2025, we hadno borrowings outstanding under our revolving credit facility. We also have a $25.0 million bi-lateral letter of credit facility and a $0.7 million letter of credit facility.

We utilize lines of credit and other commercial commitments to ensure that adequate funds are available to meet operating requirements. Letters of credit are currently arranged through our revolving credit facility, our bi-lateral facility and letter of credit facility. Letters of credit may be issued to third party suppliers, insurance companies and financial institutions and typically can only be drawn upon in the event of AWI’s failure to pay its obligations to the beneficiary. The following table presents details related to our letters of credit facilities as of September 30, 2026:

Other Commitments

In the ordinary course of business, we provide corporate guarantees and obtain surety bonds in support of underlying contractual commitments to our customers. As of September 30, 2026 and December 31, 2025, there were $31.0 million and $31.4 million, respectively, of outstanding surety bonds associated with custom manufacturing projects that were issued by reputable surety providers. In the event of our non-performance, we may be required to reimburse surety providers to cover qualifying financial loss up to the bond amounts. We believe the risk of financial loss associated with our outstanding guarantees and surety bonds is remote and as such, have recorded no liabilities associated with such commitments on our Condensed Consolidated Balance Sheets.

NOTE 14. PENSIONS AND OTHER BENEFIT PROGRAMS

The components of net periodic benefit (credits) costs are as follows:

Excluded from the table above is the net periodic pension cost associated with an unfunded defined benefit pension plan in Germany that was not included as part of prior dispositions of certain business and operations in Europe. This plan is reported as a component of our Unallocated Corporate segment. Net periodic pension cost for this plan was immaterial for the three and nine months ended September 30, 2026 and 2025.

The service cost component of net benefit (credit) cost has been presented in the Condensed Consolidated Statements of Earnings and Comprehensive Income within cost of goods sold and SG&A expenses for all periods presented, which are the same line items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit (credit) cost are presented in the Condensed Consolidated Statements of Earnings and Comprehensive Income separately from the service cost component within other non-operating income, net.

NOTE 15. FINANCIAL INSTRUMENTS AND CONTINGENT CONSIDERATION

We do not hold or issue financial instruments for trading purposes. The estimated fair values of our financial instruments and contingent consideration are as follows:

The carrying amounts of cash and cash equivalents, receivables and accounts payable approximate fair value because of the short-term maturity of these instruments. The fair value estimates of long-term debt were based on data for our Term Loan A debt provided by a major financial institution. The fair value estimates for interest rate swap contracts and foreign currency forward contracts were estimated with the assistance of an independent, third-party valuation expert and verified by obtaining quotes from major financial institutions. The fair value estimates for acquisition-related contingent consideration liabilities that are payable based on future performance were measured primarily through the use of a Monte Carlo simulation by an independent, third-party valuation specialist.

The classification of acquisition-related contingent consideration liabilities on our Condensed Consolidated Balance Sheets is summarized below:

(1)

Acquisition-related contingent consideration related to financial and performance milestones for the July 2023 acquisition of BOK Modern, LLC (“BOK”) as of December 31, 2025.

(2)

Acquisition-related contingent consideration related to future financial and performance milestones for the February 2026 acquisition of Eventscape, the September 2025 acquisition of Geometrik and the October 2023 acquisition of Insolcorp, LLC (“Insolcorp”) as of September 30, 2026, and future financial and performance milestones for the Geometrik and Insolcorp acquisitions as of December 31, 2025.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Three levels of inputs may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets or liabilities;

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data; or

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The fair value measurement of assets and liabilities measured at fair value on a recurring basis and reported on the Condensed Consolidated Balance Sheets is summarized below:

Acquisition-related contingent consideration of $3.1 million and $1.9 million as of September 30, 2026 and December 31, 2025, respectively, was measured with the use of significant unobservable inputs, which included financial projections over the earn-out periods, the volatility of the underlying financial metrics and estimated risk-free rates of return. Acquisition-related contingent consideration liabilities of $1.5 million related to the BOK acquisition as of December 31, 2025 have been excluded from the table above because the liability was not measured based on Level 3 inputs as performance milestone achievements were known.

The following table summarizes the weighted-average of the significant unobservable inputs as of September 30, 2026:

The changes in fair value of the acquisition-related contingent consideration liabilities for thethree and nine months ended September 30, 2026 and 2025 were as follows:

During the nine months ended September 30, 2026, we paid $1.5 million of additional cash consideration, which represented the achievement of certain financial and performance milestones through December 31, 2025 for the BOK acquisition, and was classified as cash flows from operating activities on our Condensed Consolidated Statements of Cash Flows. During the nine months ended September 30, 2025, we paid $1.5 million of additional cash consideration, which represented the achievement of certain financial and performance milestones through December 31, 2024 for the BOK acquisition. The cash consideration paid during the nine months ended September 30, 2025 was classified as cash flows from financing activities on our Condensed Consolidated Statements of Cash Flows, up to the acquisition date fair value. The portion of additional cash consideration paid in excess of the acquisition date fair value was classified as cash flows from operating activities on our Condensed Consolidated Statements of Cash Flows.

During the three and nine months ended September 30, 2026 and 2025, the changes in fair value of acquisition-related contingent consideration were primarily due to changes in financial projections over each entity’s earn-out periods, changes in valuation inputs and the impact of foreign exchange movements. Changes in acquisition-related contingent consideration liabilities subsequent to the initial acquisition-date measurements, excluding foreign exchange movements, were recorded as a component of SG&A expenses on our Condensed Consolidated Statements of Earnings and Comprehensive Income.

NOTE 16. DERIVATIVE FINANCIAL INSTRUMENTS

We are exposed to market risk from changes in foreign exchange rates, interest rates and commodity prices that could impact our results of operations, cash flows and financial condition. At inception, derivatives that we designate as hedging instruments are formally documented as a hedge of a forecasted transaction or cash flow hedge. We also formally assess, both at inception and at least quarterly thereafter, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged item. If it is determined that a derivative ceases to be a highly effective hedge, or if the anticipated transaction is no longer probable of occurring, we discontinue hedge accounting, and any future mark-to-market adjustments are recognized in earnings. We use derivative financial instruments as risk management tools and not for speculative trading purposes.

Counterparty Risk

We enter into derivative transactions with only established financial institution counterparties having an investment-grade credit rating. We monitor counterparty credit ratings on a regular basis. All of our derivative transactions with counterparties are governed by master International Swap and Derivatives Association agreements (“ISDAs”) with netting arrangements. These agreements can limit our exposure in situations where we have gain and loss positions outstanding with a single counterparty. We do not post nor do we receive cash collateral with any counterparty for our derivative transactions. These ISDAs do not have any credit-contingent features; however, a default under our bank credit facility would trigger a default under these agreements. Exposure to individual counterparties is controlled and we consider the risk of counterparty default to be negligible.

Interest Rate Risk

We use interest rate swaps to minimize the fluctuations in earnings caused by interest rate volatility. These swaps are designated as cash flow hedges against changes in Secured Overnight Financing Rate (“SOFR”) for a portion of our variable rate debt. The following table summarizes our interest rate swaps as of September 30, 2026:

Under the terms of the interest rate swaps above, we pay a fixed rate monthly and receive a floating rate based on SOFR.

Foreign Exchange Rate Risk

During the third quarter of 2026, we entered into foreign currency forward contracts to reduce our exposure to the risk that cash outflows related to certain fixed asset purchases from foreign suppliers will be adversely affected by changes in Euro exchange rates. These derivative instruments are designated as cash flow hedges against these forecasted transactions. As of September 30, 2026, the notional amount of the foreign currency forward contracts was $3.9 million and all foreign currency forward contracts mature within 12 months. There wereno foreign currency forward contracts outstanding as of December 31, 2025. Gains and losses on these instruments are recorded in other comprehensive income, to the extent effective, and subsequently reclassified to earnings when the hedged transaction is recognized in earnings. Any mark-to-market gains or losses on ineffective portions of hedges are recognized in cost of goods sold. There were no ineffective portions of these hedges recognized during the three months ended September 30, 2026.

Financial Statement Impacts

The following tables detail amounts related to our derivatives as of September 30, 2026 and December 31, 2025. We did not have any derivative assets or liabilities not designated as hedging instruments as of September 30, 2026 or December 31, 2025. The derivative asset and liability amounts below are shown gross and have not been netted.

As of September 30, 2026, the amount of existing gains in Accumulated Other Comprehensive Loss (“AOCL”) expected to be recognized in net earnings over the next twelve months was $0.8 million.

NOTE 17. SHAREHOLDERS’ EQUITY

Common Stock Repurchase Plan

On July 29, 2016, the Board of Directors of the Company approved a share repurchase program authorizing us to repurchase up to $150.0 million of our outstanding shares of common stock (the “Program”). Since inception of the Program, this authorization has been increased to permit repurchases of up to an aggregate of $2,500.0 million of our outstanding shares of common stock through December 31, 2029. We had $1,122.9 million remaining under the Board’s repurchase authorization as of September 30, 2026.

Repurchases of our common stock under the Program may be made through open market, block and privately negotiated transactions, including Rule 10b5-1 plans, at such times and in such amounts as management deems appropriate, subject to market and business conditions, regulatory requirements and other factors. The Program does not obligate AWI to repurchase any particular amount of common stock and may be suspended or discontinued at any time without notice.

During the three months ended September 30, 2026, we repurchased 0.4 million shares under the Program for a total cost of $75.0 million, excluding commissions and taxes, or an average price of $174.36 per share. During the nine months ended September 30, 2026, we repurchased 1.2 million shares under the Program for a total cost of $209.9 million, excluding commissions and taxes, or an average price of $170.65 per share. Since inception and through September 30, 2026, we have repurchased 16.6 million shares under the Program for a total cost of $1,377.1 million, excluding commissions and taxes, or an average price of $82.74 per share.

Dividends

In February, April and July 2026, our Board of Directors declared $0.339 per share quarterly dividends, which were paid to shareholders in March, May and August 2026. On October 21, 2026, our Board of Directors declared a $0.373 per share quarterly dividend to be paid in November 2026.

Accumulated Other Comprehensive (Loss)

The following tables summarize the activity, by component, related to the change in AOCL for thethree and nine months ended September 30, 2026 and 2025:

(1)

Amounts are net of tax.

(2)

Amounts include our 50% share of AOCI components from our WAVE joint venture.

The amounts reclassified from AOCL, and the affected line item of the Condensed Consolidated Statements of Earnings and Comprehensive Income, are presented in the table below:

NOTE 18. LITIGATION AND RELATED MATTERS

ENVIRONMENTAL MATTERS

Environmental Compliance

Our manufacturing and research facilities are affected by various federal, state and local requirements relating to the discharge of materials and the protection of the environment. We make expenditures necessary for compliance with applicable environmental requirements at each of our operating facilities. While these expenditures are not typically material, the applicable regulatory requirements continually change and, as a result, we cannot predict with certainty the amount, nature or timing of future expenditures associated with environmental compliance.

Environmental Sites

Summary

We are actively involved in the investigation and remediation of existing or potential environmental contamination under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and state Superfund and similar environmental laws at two domestically owned locations allegedly resulting from past industrial activity.

In each location, we are one of multiple potentially responsible parties and have agreed to jointly fund the required investigation and remediation, while preserving our defenses to the liability. We may also have rights of contribution or reimbursement from other parties or coverage under applicable insurance policies. We have pursued coverage and recoveries under those applicable insurance policies with respect to certain of the sites, including the Macon, Georgia site and the Elizabeth City, North Carolina site, each of which is summarized below. Other than disclosed below, we are unable to predict the outcome of these matters or the timing of any future recoveries, whether through settlement or otherwise. We are also unable to predict the extent to which any recoveries might cover our final share of investigation and remediation costs for these sites. Our final share of investigation and remediation costs may exceed any such recoveries, and such amounts net of insurance recoveries may be material.

Between 2017 and 2021, we entered into settlement agreements totaling $53.0 million with certain legacy insurance carriers to resolve ongoing litigation and recover fees and costs previously incurred by us in connection with certain environmental sites. These settlements were recorded as reductions to cost of goods sold and SG&A expenses, reflecting the same income statement categories where environmental expenditures were historically recorded. From 2020 through the third quarter of 2024, cumulative insurance recoveries exceeded cumulative expenses to date related to the respective environmental sites and the excess was recorded within long-term liabilities on our Condensed Consolidated Balance Sheets. These excess recoveries were released to offset additional reserves for potential liabilities incurred on the respective environmental sites. We may enter into additional settlement agreements in the future, which may or may not be material, with other legacy insurers to obtain reimbursement or contribution for environmental site expenses.

Estimates of our future liability at the environmental sites are based on evaluations of currently available facts regarding each individual site. We consider factors such as our activities associated with the site, existing technology, presently enacted laws and regulations and prior company experience in remediating contaminated sites. Although current law imposes joint and several liability on all parties at Superfund sites, our contribution to the remediation of these sites is expected to be limited by the number of other companies potentially liable for site remediation. As a result, our estimated liability reflects only our expected share. In determining the probability of contribution, we consider the solvency of other parties, the site activities of other parties, whether liability is being disputed, the terms of any existing agreements and experience with similar matters, and the effect of our October 2006 Chapter 11 reorganization and separation with Armstrong Flooring, Inc. upon the validity of the claim, if any.

Specific Material Events

Macon, Georgia

The U.S. Environmental Protection Agency (the “EPA”) has listedtwo landfills located on a portion of our facility in Macon, Georgia, along with the former Macon Naval Ordnance Plant landfill adjacent to our property, portions of Rocky Creek, and certain tributaries leading to Rocky Creek (collectively, the “Macon Site”) as a Superfund site on the National Priorities List due to the presence of contaminants, most notably polychlorinated biphenyls (“PCBs”).

In September 2010, we entered into an Administrative Order on Consent for a Removal Action (the “Removal Action”) with the EPA to investigate PCB contamination inone of the landfills on our property, the Wastewater Treatment Plant Landfill (“Operable Unit 1”). After completing an investigation of Operable Unit 1 and submitting our final Engineering Evaluation/Cost Analysis, the EPA issued an Action Memorandum in July 2013 selecting our recommended remedy for the Removal Action. The Operable Unit 1 final report was submitted to the EPA in October 2016, the EPA approved the final report in November 2016, and a Post-Removal Control Plan was submitted to the EPA in March 2017. AWI has been conducting operation and maintenance activities of the completed remedy since 2017 consistent with the approved Post-Removal Control Plan.

In September 2015, AWI and other Potentially Responsible Parties (“PRPs”) received a Special Notice Letter from the EPA under CERCLA inviting AWI and the PRPs to enter into the negotiation of a Remedial Investigation and Feasibility Study (“RI/FS”) with respect to the remainder of the Superfund site, which included the other landfill on our property, as well as areas on and adjacent to our property and Rocky Creek (“Operable Unit 2”). In the second half of 2022, the EPA and the PRPs agreed to separate all non-groundwater aspects of the site from the ongoing groundwater investigation.

Based on findings in a Remedial Investigation Report (“RIR”) which included relevant risk assessments previously conducted and that was approved by the EPA in July 2023, the PRPs developed and submitted to the EPA a draft Feasibility Study (“FS”) to identify and evaluate potential remedial alternatives for all non-groundwater elements of Operable Unit 2. Following review and comment by the EPA and the State of Georgia and revisions to the FS to address those comments, the EPA conditionally approved the FS in April 2024 and issued a Proposed Remedial Action Plan (“Proposed Plan”) for the non-groundwater elements at the site in May 2024, which included a total cost estimate for the non-groundwater elements at the site of approximately $8 million. In August 2024, the EPA signed the Record of Decision, selecting the remedy outlined in the Proposed Plan. In April 2026, the EPA issued a Special Notice Letter to the PRPs to conduct the Remedial Design/Remedial Action (“RD/RA”) for the Operable Unit 2 remedy. The portion of these remediation costs that AWI will bear for all non-groundwater elements of Operable Unit 2 will be formalized once the PRPs resolve the final allocation of costs. During the third quarter of 2026, the PRPs met with the EPA to discuss preliminary comments on the draft Consent Decree for implementing the RD/RA.

In March 2025, AWI and the other PRPs proposed that the investigation of the groundwater elements of the areas constituting Operable Unit 2 (now designated as “Operable Unit 3”), be completed in conjunction with the groundwater investigation at the adjacent former Macon Naval Ordinance Plant landfill, however, the EPA rejected this request and required two separate remedial investigation reports. Thereafter, the EPA requested a Work Plan for the remaining RI/FS work for Operable Unit 3, which is due in January 2027.

It is probable that we will incur field investigation, engineering and oversight costs associated with designing and implementing the RD/RA remedy for all non-groundwater elements of Operable Unit 2 and for completing an RI/FS for Operable Unit 3. We may also ultimately incur costs in remediating contamination discovered during the RI/FS for Operable Unit 3, and we are unable to reasonably estimate our final share of the total costs associated with the investigation work or any resulting remediation therefrom, although such amounts may be material to any one quarter’s or year’s results of operations in the future. We do not expect the total future costs to have a material adverse effect on our liquidity or financial condition as the cash payments may be made over many years.

Elizabeth City, North Carolina

This site is a former cabinet manufacturing facility that from 1977 until 1996 was operated by Triangle Pacific Corporation, which became Armstrong Wood Products, Inc. (“AWP”), and is now known as AHF Products, LLC. The site was formerly owned by the U.S. Navy (“Navy”) and Westinghouse, which was purchased by Paramount, a Skydance Corporation (“Paramount”) (then known as CBS Corporation). We assumed ownership of the site when we acquired the stock of AWP in 1998. In connection with the separation of Armstrong Flooring, Inc. in 2016, we agreed to retain any legacy environmental liabilities associated with the AWP site.

Prior to our acquisition of the site, the North Carolina Department of Environment and Natural Resources listed the site as a hazardous waste site. In 1997, AWP entered into a cost sharing agreement with Westinghouse whereby the parties agreed to share equally the costs associated with site investigation. In 2007, we and Paramount entered into an agreement with the Navy whereby the Navy agreed to payone third ofdefined past and future investigative costs up to a certain amount, which has now been exhausted. The EPA approved an RI/FS work plan for the site in August 2011. In July 2018, the EPA published an Interim Record Of Decision (“IROD”) selecting an interim cleanup approach. In June 2021, we entered into a negotiated Partial Consent Decree and Site Participation Agreement with the EPA, Paramount and the U.S. on behalf of the Navy for the remedial design and remedial action for the interim remedy. Because the U.S. does not conduct work as a PRP at Superfund sites, similar to the 2007 agreement, the U.S. agreed to pay its share of the estimated costs of performing the work and, as part of the Consent Decree Financial Assurance, the Company and Paramount also funded their estimated shares of the Interim Remedy. The Partial Consent Decree was entered by the U.S. District Court for the Eastern District of North Carolina in January 2022. A Remedial Design Work Plan was approved by the EPA in

February 2023 and in December 2024, and the EPA approved the Pre-Design Investigation Work Plan and related Quality Assurance Project Plan. Since March 2025, AWP and Paramount have been conducting pre-design investigation activities focused on additional soil and groundwater sampling to inform remedy implementation, with the initial assessment submitted to the EPA in March 2026.

The current estimate of future liability at this site includes only our estimated share of the costs of implementing the interim remedial action under the IROD. We are unable to reasonably estimate our final share of the total costs associated with the interim or final remediation at the site, although such amounts may be material to any one quarter's or one year’s results of operations in the future. We do not expect the total future costs to have a material adverse effect on our liquidity or financial condition as the cash payments may be made over many years.

Summary of Financial Position

Total liabilities of $4.5 million and $4.1 million as of September 30, 2026 and December 31, 2025, respectively, were recorded for environmental matters that we consider probable and for which a reasonable estimate of the probable liability could be made. As of September 30, 2026 and December 31, 2025, environmental liabilities of $4.3 million and $4.1 million, respectively, were reflected within other long-term liabilities on the Condensed Consolidated Balance Sheets. As of September 30, 2026, environmental liabilities of $0.2 million were reflected within other current liabilities on the Condensed Consolidated Balance Sheets. During the three and nine months ended September 30, 2026, we recorded additional reserves for potential environmental liabilities of $0.1 million and $0.7 million, respectively, as a component of SG&A expenses on our Condensed Consolidated Statements of Earnings and Comprehensive Income. During the three and nine months ended September 30, 2025, werecorded additional reserves for potential environmental liabilities of $0.1 million.

Where existing data is sufficient to estimate the liability, that estimate has been used; where only a range of probable liabilities is available and no amount within that range is more likely than any other, the lower end of the range has been used. As assessments and remediation activities progress at each site, these liabilities are reviewed to reflect new information as it becomes available and adjusted to reflect amounts actually incurred and paid. These liabilities are undiscounted.

The estimated environmental liabilities above do not take into account any claims for additional recoveries from insurance or third parties. It is our policy to record insurance recoveries as assets on the Condensed Consolidated Balance Sheets when realizable. We incur costs to pursue environmental insurance recoveries, which are expensed as incurred.

Actual costs to be incurred at identified sites may vary from our estimates. Based on our knowledge of the identified sites, it is not possible to reasonably estimate future costs in excess of amounts already recognized.

OTHER CLAIMS

From time to time, we are involved in other various lawsuits, claims, proceedings, disputes, inquiries, investigations and other legal matters that arise in the ordinary course of business, including matters involving our products, intellectual property, contracts, employees, relationships with suppliers, relationships with distributors, other customers or end users, relationships with competitors, compliance with laws, statutes and regulations and other matters. In connection with those matters, and in addition to our defenses to them, we may have rights of indemnity, contribution or reimbursement from other parties or coverage under applicable insurance policies. When applicable and appropriate, we will seek indemnity, contribution or reimbursement from other parties and pursue coverage and recoveries under those policies, but we are unable to predict the outcome of those demands. While complete assurance cannot be given to the outcome of any proceedings relating to these matters, including the success of our defenses, we do not believe that any current claims, individually or in the aggregate, will have a material adverse effect on our financial condition, liquidity or results of operations.

NOTE 19. NET EARNINGS PER SHARE

The following table is a reconciliation of basic shares outstanding to diluted shares outstanding for thethree and nine months ended September 30, 2026 and 2025 (shares in millions):

There wereno anti-dilutive stock awards excluded from the computation of dilutive earnings per share for the three months ended September 30, 2026. There were 2,288 of anti-dilutive stock awards excluded from the computation of dilutive earnings per share for the nine months ended September 30, 2026. Anti-dilutive stock awards excluded from the computation of dilutive earnings per share for the three and nine months ended September 30, 2025 were 261 and 19,439, respectively.