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     ARMSTRONGFLOORING, INC.First Quarter 2016 Results

    May 9, 2016

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    SAFE HARBOR STATEMENTDisclosures in this release and in our other public documents and comments contain forward-looking statements within themeaning 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 ofsimilar meaning in connection with any discussion of future operating or financial performance. Forward-lookingstatements, by their nature, address matters that are uncertain and involve risks because they relate to events and dependon circumstances that may or may not occur in the future. As a result, our actual results may differ materially from ourexpected results and from those expressed in our forward looking statements. A more detailed discussion of the risks anduncertainties that could cause our actual results to differ materially from those projected, anticipated or implied is includedour reports filed with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the datethey are made. We undertake no obligation to update any forward-looking statements beyond what is required underapplicable securities law. The information in this presentation is only effective as of the date given, May 9, 2016, and issubject to change. Any distribution of this presentation after May 9, 2016 is not intended and will not be construed asupdating or confirming such information.

    In addition, we will be referring to “non-GAAP financial measures” within the meaning of SEC Regulation G. A reconciliationof the differences between these measures with the most directly comparable financial measures calculated in accordancewith GAAP can be found in the appendix section of this presentation.

     Armstrong Flooring, Inc. competes globally in many diverse markets. References to "market " or "share " data are simplyestimations based on a combination of internal and external sources and assumptions. They are intended only to assistdiscussion of the relative performance of product segments and categories for marketing and related purposes. Noconclusion has been reached or should be reached regarding a " product market ," a "geographic market " or “marketshare ,” as such terms may be used or defined for any economic, legal or other purpose.

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    • When reporting our financial results within this presentation,

    we make several adjustments. Management uses non-GAAP

    measures in managing the business and believes the

    adjustments provide meaningful comparisons of operating

    performance between periods. Reconciliations to the

    nearest equivalent GAAP measures are presented on the

    following pages.

    • We report in comparable dollars to remove the effects of

    currency translation on the P&L. The budgeted exchange

    rate for 2016 is used for all currency translations in 2016

    and prior years.

    • We remove the impact of certain discrete expenses and

    income. Examples include plant closures, restructuring

    actions, separation costs and other large unusual items.

    The non-cash expense impact of the U.S. pension is also

    excluded.

    Item Adjustments

    Comparable

    Dollars

    Other

    Adjustments

    Net Sales Yes No

    Gross Profit Yes Yes

    SG&A Expense Yes Yes

    Operating Income Yes Yes

    Cash Flow No No

    EBITDA Yes Yes

    BASIS OF PRESENTATION EXPLANATION

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    Overview and Highlights

    Operating and Financial Results

    Balance Sheet and Cash Flow

    Outlook

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    KEY HIGHLIGHTS  – FIRST QUARTER 2016(Dollars in Millions) 2016 2015 Variance

    Adjusted Net Sales

    (1)

      $285 $257 11%

    Adjusted Operating (Loss) Income

    (2) ($2) ($7) nm

    % of Sales (1%) (3%) 200 bps

    Adjusted EBITDA

    (3) 10 3 >100%

    % of Sales 3% 1% 235 bps

    (1) As reported Net Sales $284M in 2016 and $259M in 2015

    (2) As reported Operating (Loss) Income ($5M) in 2016 and ($3M) in 2015

    (3) See slide 11 for a reconciliation of Adjusted EBITDA to the nearest GAAP measure

    • Unit volume growth of 12% driven by Americas Resilient +6% and Wood +23%

    •  Adjusted EBITDA improvement due to volume increase, partially offset by expenses for luxury vinyl tile (LVT) plant ramp up

    • LVT plant operating, but at lower than expected throughput

    • Completed spin off from Armstrong World Industries on April 1

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    BUILDING VALUE: UNIQUE OPPORTUNITY Leading hard surfaces flooring company

    Most recognized brands Expansive product portfolio

    Renewed focus on innovation

    Differentiated go-to-market system

    Operational, financial and organizational transformation

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    Initiatives Starting to Show Results

    Product

    Go-to-Market

    Completed

    Capital

    Investments

    People

     TRANSFORMATION UNDERWAY

    Focus on product innovation

    Manage under-performing SKUs

    Improvements in price and mix

    Distributor and retailer support

    Merchandising investments

    Consumer purchase journey

    New LVT plant

    Expanded Asia capacity

    Increased Engineered Wood capacity

    New leadership team

    Customer-focused organization

    Incentive plans tied to shareholder returns

    Q4 2015 

    TOTAL UNIT

    VOLUME+4%

     ADJUSTED EBITDA+10%

    ENGINEERED

    WOOD VOLUME+20%

    LVT VOLUME+34%

    FOCUS AREAS  Q1 2016 

    +12%

    +32%

    +42%

    >100

    Note: Q4 2015 and Q1 2016 comparisons versus the same quarter in the prior year

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    • Net sales increased 11% on a constant currency basis

    • Volume increased 12% driven by Wood

    • Price reduced sales by 3% reflecting pricing actions toremain competitive in a deflationary environment

    • Mix was positive due to strong growth in LVT

    • Fall through on incremental volume offset by pricepressure in LVT, Wood

    • Benefit of lower input costs and productivity in Woodpartially offset by LVT plant ramp up expenses

    • Increase in SG&A reflects continued spending to supportgo-to-market initiatives

     AFI FIRST QUARTER RESULTS

    Key Highlights

    Q1 2015 Adjusted EBITDA 3M

    Volume 12Price (7)

    Mix/Other (1)

    Mfg & Input Costs 4

    SG&A (1)

    Q1 2016 Adjusted EBITDA 10M

    $164 $157

    $121$103

    2016 2015

    Reported Net Sales ( M)

    Resilient Wood

     

    284

    259

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    • Net sales increased 6% on a constant currency basis

    • Volume increased 5%; growth in the Americas of 6%driven by LVT and VCT

    • Price reduced sales by 1%; mix was positive due tostrong growth in LVT

    • Fall through on incremental volume partially offset byprice pressure in LVT

    • Mix positive due to strong growth in LVT

    • Benefit of lower input costs more than offset by LVT plantramp up expenses, including product qualifications

    Key Highlights

    Q1 2015 Adjusted EBITDA 4M

    Volume 4

    Price (2)

    Mix/Other 1

    Mfg & Input Costs (3)

    SG&A 1

    Q1 2016 Adjusted EBITDA 4M

    164

    157

    2016 2015

    Reported Net Sales ( M)

    Resilient

    RESILIENT SEGMENT

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    • Net sales increased 18% on a constant currency basis

    • Volume increased 23% (including load in of majoraccounts) driven by growth in engineered wood of 32%

    • Price reduced sales by 4% reflecting continuedreductions to be competitive in the market

    • Volume increase driven by strong demand and fullengineered wood capability at Somerset, KY facility

    • Lumber costs lower than previous year, but sequentiallyhigher through the quarter

    • SG&A higher to support go to market activities

    Key Highlights

    Q1 2015 Adjusted EBITDA ( 2M)

    Volume 8

    Price (5)

    Mix/Other (2)

    Mfg & Input Costs 8

    SG&A (2)

    Q1 2016 Adjusted EBITDA 5M

    $121

    $103

    2016 2015

    Reported Net Sales ( M)

    Wood

    WOOD SEGMENT

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    (Dollars in Millions)2016 2015

    EBITDA

     – Adjusted $10 $3

    Depreciation and Amortization (11) (9)

    Operating (Loss) Income – Adjusted ($2) ($7)

    Cost Reduction (Expense)/Income and Multilayered Wood Flooring Duties (0) 1

    US Pension Expense (2) (3)

     Adjustment for Corporate Expense(1)

    (1) 4

    Foreign Exchange Rate Comparability 0 1

    Operating (Loss) Income

     – As Reported ($5) ($3)

    Interest/Other (Expense) (0) 0

    Tax (Expense) 0 (1)

    Net (Loss) Earnings from Continuing Operations ($4) ($4)

    Net Earnings from Discontinued Operations, net of tax 2 43

    Net (Loss) Earnings ($3) $39

    (1) 2015 reflects $9M of pro forma, standalone corporate costs net of the adjustments of allocated AWI corporateexpenses for carve out accounting

    Rows and columns may not sum due to rounding

    RECONCILIATION OF ADJUSTED EBITDA

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    (Dollars in Millions) March 31,2016

    December 31,

    2015

    Cash & Cash Equivalents -- --

     Accounts & Notes Receivable $100 $72

    Inventory  $240 $243

    Property, Plant & Equipment, Net $433 $434

    Other Assets $109 $114

    Total Assets 882 863

     Accounts Payable, AccruedExpenses & Deferred Income Tax

    $145 $161

    Debt -- $10

    Other Liabilities $74 $74

     AWI Equity $663 $618

    Total Liabilities and AWI Equity 882 863

    Expect net pension liability of $33M ($383Mprojected pension obligation and fair value ofapproximately $350M of pension assets)

    • On April 1, entered into five year, $225Mcredit facility

    • Draw of $100M against facility; $50Mdividend payment to AWI (remaining balancenet of fees available for operating liquidity)

    • Leverage of 1x net debt to EBITDA

    • First quarter operating cash flow a draw of$29M compared to draw of $35M in prior

    year quarter; net cash used for investingactivities ($8M) and ($11M) in the firstquarter of 2016 and 2015, respectively

    BALANCE SHEET AND CASH FLOW

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    2016 OUTLOOK

    Negative PositiveFREE CASH FLOW(2)

    2015 2016

    (1) Based on 2016 budgeted exchange rates; see appendix for reconciliation(2) Free cash flow is defined as net cash from operating activities less net cash from investing activities

     ADJ. NET SALES $1,200 - $1,250 million$1,183 million(1) 1% - 6% growth

    $61million(1)

    $65 - $80 million ADJ. EBITDA 7% - 31% growth

    $50 - $60 millionCAPITAL EXPENDITURES $62 million 

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    BUILDING VALUE: UNIQUE OPPORTUNITY Leading hard surfaces flooring company

    Most recognized brands

    Expansive product portfolio

    Renewed focus on innovation

    Differentiated go-to-market system

    Operational, financial and organizational transformation

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     Appendix

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    NET SALES RECONCILIATION

    ($ millions)

    Net Sales - AFI 2015 - Q1 2015 - Q2 2015 - Q3 2015 - Q4 2015 2016 - Q1

    Adjusted Net Sales at 2016 budgeted FX rates 257  324  322  280  1,183  285 

    2016 comparability FX adjustment 2  3  1  -  6  (1) 

    Net Sales - As Reported(1)

    259$ 327$ 323$ 280$ 1,189$ 284$

    Net Sales - Resilient 2015 - Q1 2015 - Q2 2015 - Q3 2015 - Q4 2015 2016 - Q1

    Adjusted Net Sales at 2016 budgeted FX rates 155  198  191  165  709  164 2016 comparability FX adjustment 2  2  1  (1)  4  (1) 

    Net Sales - As Reported(1)

    157$ 200$ 192$ 164$ 713$ 164$

    Net Sales - Wood 2015 - Q1 2015 - Q2 2015 - Q3 2015 - Q4 2015 2016 - Q1

    Adjusted Net Sales at 2016 budgeted FX rates 102  126  130  116  474  121 

    2016 comparability FX adjustment 1  -  -  -  1  (0) 

    Net Sales - As Reported (1) 103$ 127$ 130$ 116$ 475$ 121$

    (1) Reflects net sales on carve-out basis consistent with Form 10 for 2015; 2016 sales as reported in the 10-Q for the period ending March 31, 2016

    Note: rows and columns may not sum due to rounding

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    EBITDA RECONCILIATION  – AFI($ millions)

    Total Company Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 2016 - Q1

    Standalone Adjusted EBITDA at 2016 budgeted FX rates 3$ 28$ 24$ 6$ 61$ 10$

    Depreciation and amortization (9)  (9)  (10)  (10)  (38)  (11) 

    Cost reduction (expense)/income and multilayered wood flooring duties 1  (4)  -  (1)  (4)  - 

    U.S. non-cash pension (3)  (2)  (4)  (4)  (12)  (2) 

    Adjustment for standalone corporate expenses 9  10  10  11  40  na

    Carve-out adjustments of AWI corporate expenses, excluding non-cash U.S. pension (5)  (9)  (9)  (8)  (32)  (1) 

    Comparability FX adjustment 1  1  1  1  3  - 

    AFI Operating Income (Loss) - As Reported (3)$ 15$ 12$ (5)$ 18$ (5)$

    Resilient Segment Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 2016 - Q1

    Standalone Adjusted EBITDA at 2016 budgeted FX rates 4$ 22$ 16$ (2)$ 40$ 4$

    Depreciation and amortization (6)  (6)  (7)  (7)  (26)  (8) Cost reduction (expense)/income and multilayered wood flooring duties 1  -  (1)  -  -  - 

    U.S. non-cash pension (3)  (2)  (3)  (3)  (10)  (2) 

    Adjustment for standalone corporate expenses 6  7  7  7  27  na

    Carve-out adjustments of AWI corporate expenses, excluding non-cash U.S. pension (3)  (7)  (6)  (4)  (21)  - 

    Comparability FX adjustment 1  1  (1)  -  1  1 

    Resilient Segment Operating Income (Loss) - As Reported -$ 15$ 5$ (9)$ 11$ (5)$

    Wood Segment Q1 2015 Q2 2015 Q3 2015 Q4 2015 2015 2016 - Q1

    Standalone Adjusted EBITDA at 2016 budgeted FX rates (2)$ 6$ 11$ 7$ 21$ 5$

    Depreciation and amortization (3)  (3)  (3)  (3)  (12)  (3) 

    Cost reduction (expense)/income and multilayered wood flooring duties -  (4)  -  -  (4)  - 

    U.S. non-cash pension -  -  (1)  -  (1)  - 

    Adjustment for standalone corporate expenses 3  3  3  4  13  na

    Carve-out adjustments of AWI corporate expenses, excluding non-cash U.S. pension (2)  (3)  (3)  (4)  (12)  - 

    Comparability FX adjustment -  1  -  -  2  - 

    Wood Segment Operating Income (Loss) - As Reported (4)$ -$ 7$ 4$ 7$ 1$

    Note: rows and columns may not sum due to rounding