Financial Analysis

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. The total fair value of cash and other tangible assets acquired, less liabilities assumed, was $ 3.2 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 $ 11.1 million. The total fair value of identifiable intangible assets acquired was $ 16.5 million, resulting in $ 45.3 million of goodwill. Identified intangible assets consist primarily of amortizable trademarks of $ 10.4 million and customer relationships of $ 5.6 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 …

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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 June 30, 2026 and December 31, 2025, the principal balance of our Term Loan A was $ 405.5 million and $ 410.6 million, respectively. As of June 30, 2026 , borrowings outstanding under our revolving credit facility were $ 90.0 million. As of December 31, 2025 , we had no 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 AWIs failure to pay its obligations to the beneficiary. The following table presents details related to our letters of credit facilities as of June 30, 2026: June 30, 2026 Financing Arrangements Limit Used Available Bi-lateral facility $ 25.0 $ 7.7 $ 17.3 Letter of credit facility 0.7 0.5 0.2 Revolving credit …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

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: June 30, 2026 December 31, 2025 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Liabilities, net: Total long-term debt, including current portion $ ( 492.0 ) $ ( 492.0 ) $ ( 406.7 ) $ ( 406.7 ) Interest rate swap contracts ( 0.5 ) ( 0.5 ) ( 3.4 ) ( 3.4 ) Acquisition-related contingent consideration ( 3.2 ) ( 3.2 ) ( 3.4 ) ( 3.4 ) 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 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: Balance Sheet …

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NOTE 9. GOODWILL AND INTANGIBLE ASSETS The following table presents amounts related to our goodwill and intangible assets as of June 30, 2026 and December 31, 2025: June 30, 2026 December 31, 2025 Estimated Useful Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortizing intangible assets Customer relationships 3 - 20 years $ 197.8 $ 177.1 $ 191.6 $ 170.7 Developed technology 10 - 20 years 111.0 88.9 110.3 87.9 Trademarks and brand names 3 - 20 years 35.4 6.7 24.4 5.8 Software 5 - 7 years 19.7 12.9 19.7 11.2 Non-compete agreements 3 - 5 years 8.0 3.5 7.1 2.6 Other Various 7.4 4.0 7.4 2.9 Total $ 379.3 $ 293.1 $ 360.5 $ 281.1 Non-amortizing intangible assets Trademarks and brand names Indefinite 345.9 345.8 Total intangible assets $ 725.2 $ 706.3 Goodwill Indefinite $ 259.2 $ 217.8 As of June 30, 2026 and December 31, 2025 , goodwill totaled $ 259.0 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 June 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 the three and six months ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months En …

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NOTE 12. INCOME TAX EXPENSE The following table presents our effective tax rate for the three and six months ended June 30, 2026 and 2025: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Earnings before income taxes $ 126.9 $ 115.3 $ 215.3 $ 206.0 Income tax expense 30.2 27.5 51.8 49.1 Effective tax rate 23.8 % 23.9 % 24.1 % 23.8 % The slight decline in the effective tax rate for the second quarter of 2026 compared to the same period in 2025 was due to favorable impacts from executive compensation limitations and excess tax benefits related to stock-based compensation, largely offset by the absence of an investment tax credit recognized in the second quarter of 2025. The modest increase in the effective tax rate for the first six months of 2026 as compared to the same period in 2025 was due to the absence of an investment tax credit recognized in the prior year, partially offset by benefits from lower executive compensation limitations and higher excess tax benefits related to stock-based compensation. 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.

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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 …

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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 March 31, 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 …

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NOTE 14. PENSIONS AND OTHER BENEFIT PROGRAMS The components of net periodic benefit costs (credits) are as follows: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Pension benefits Service cost of benefits earned during the period $ 0.5 $ 0.6 $ 1.0 $ 1.2 Interest cost on projected benefit obligation 3.8 4.1 7.7 8.3 Expected return on plan assets ( 5.7 ) ( 5.6 ) ( 11.5 ) ( 11.2 ) Amortization of net actuarial loss 1.4 1.4 2.7 2.7 Net periodic pension cost (credit) $ - $ 0.5 $ ( 0.1 ) $ 1.0 Retiree health and life insurance benefits Interest cost on projected benefit obligation $ 0.4 $ 0.5 $ 0.8 $ 1.0 Amortization of prior service credit - ( 0.1 ) - ( 0.1 ) Amortization of net actuarial gain ( 0.4 ) ( 0.4 ) ( 0.9 ) ( 0.8 ) Net periodic postretirement (credit) cost $ - $ - $ ( 0.1 ) $ 0.1 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. 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 six months ended June 30, 2026 and 2025. The service cost component of net benefit 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 rende …

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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 maintena …

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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: For the three months ended June 30, 2026 Mineral Fiber Architectural Specialties Unallocated Corporate Total Net sales to external customers $ 288.2 $ 183.8 $ - $ 472.0 Cost of goods sold 166.8 109.8 0.4 277.0 Gross profit (loss) 121.4 74.0 ( 0.4 ) 195.0 SG&A expenses 48.7 44.7 0.3 93.7 Loss related to change in fair value of contingent consideration, net 1.0 ( 0.1 ) - 0.9 Equity (earnings) loss from unconsolidated affiliates, net ( 33.6 ) - 0.2 ( 33.4 ) Segment operating income (loss) $ 105.3 $ 29.4 $ ( 0.9 ) $ 133.8 Depreciation and amortization $ 22.0 $ 8.2 $ - $ 30.2 Purchases of prop …

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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 $ 1,700.0 million of our outstanding shares of common stock through December 31, 2026 . We had $ 397.9 million remaining under the Boards repurchase authorization as of June 30, 2026. On July 21, 2026, the Board of Directors of the Company approved an additional $ 800.0 million authorization under the Program, increasing the total authorized amount available for repurchases to $ 2,500.0 million, and extending the Program through December 31, 2029 . 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 June 30, 2026, we repurchased 0.5 million shares under the Program for a total cost of $ 74.9 million, excluding commissions and taxes, or an average price of $ 163.20 per share. Du …

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