Building Products. Steve Senkowski. Executive Vice President

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1 Steve Senkowski Executive Vice President 1

2 ABP 007 Sales by Geography (Ceilings & Grid) ($-Billions) 100 Sales Are >90% Commercial Operating Profit Americas W. Europe E. Europe/Middle East Asia % 13% % 14% $1.6B in sales is a full consolidation of WAVE and the segment (ABP) and is, therefore, greater than reported ABP sales Asia and Eastern European growth opportunities

3 ABP Product Categories Core Ceilings Key Characteristics Mineral fiber wet felt/soft fiber (fiberglass) Acoustics Durability Surface Pattern Grid Load rating Face width/design Installed (NYC) cost: $ $8.50/sq. ft. Armstrong selling price: $ $.75/sq. ft. 3

4 ABP Product Categories Specialties Design Accents Acoustical Accents Installed (NYC) cost: $11 - $10/sq. ft. Armstrong selling price: $8 - $100/sq. ft. Architectural Specialties 4% annual growth since $3M sales $9M operating profit Expanded product portfolio 4

5 Commercial Construction Selling Process Owner Architect General Contractor Ceiling Subcontractor Distributor Manufacturer U.S. Key Drivers of Loyalty/Satisfaction Architect Experience level Ease of doing business Acoustical design expertise Ceiling Subcontractor Ease of doing business Experience level Competitive prices Distributor Pricing process Plant service Armstrong sales rep Ceilings-only sales force focused on specific customer groups 5

6 Mineral Fiber Ceilings Manufacturing Locations Wet Felt Mineral Fiber ABP Competition Number of plants Number of competitors Soft Fiber ABP Competition Number of plants Number of competitors Americas Europe Asia* N/A 1 9 N/A * Low-end Chinese manufacturers not included ( 60) ABP has broadest presence 6

7 Commercial Ceiling Coverage by Material Category Size of Market (B sq. ft.) % Market Americas W. Europe Russia China Wet Felt Soft Fiber Metal Drywall Other Exposed structure (no ceiling) is 1% of U.S. total ceiling area Russia is second largest mineral fiber ceiling market Mineral fiber ceilings the top choice in most markets 7

8 Mineral Fiber Commercial Ceilings Market Shares 60 North America 40 Western Europe Armstrong USG CertainTeed Armstrong Rockfon OWA AMF Ecophon Wet Felt Only Soft Fiber Only *Russia market share is 3% *China market share is 0% Low-end Chinese share in Russia is 60% and China is 50% *Armstrong is No. 1 ABP is global leader in mineral fiber category 8

9 Commercial Market Segments % New Construction 30% 43% >90% % Americas W. Europe China Office Education Healthcare Retail Other Renovation is the majority of the opportunity in the U.S. and Western Europe U.S. office construction downturn will have limited effect on volume 9

10 WAVE Sales ($) Operating Profit (%) Product innovation - cost reduction and share gain Steel/product pricing 000 to to 007 Manufacturing consolidation Share gain Steel/product pricing Product innovation to improve usability, reduce cost, increase market share and enhance margins 10

11 U.S. Commercial Ceilings Downturn Volume Decline % What s Changed Pricing discipline 008 First Half 5% Price vs. Inflation 100% 50% Market share gain 100+% Mix Operating Profit 3% % 19% 14% Architectural Specialties growth 4% 5% Disciplined pricing and new product initiatives produce solid margins in commercial downturn 11

12 Key Strengths and Growth Strategies 1 Best Product Portfolio European soft fiber Local Asian products Specialties new materials Core ceilings and grid new product leadership 3 Low-Cost Manufacturing Build manufacturing plant in Russia Expand manufacturing capacity in China Complete Market Coverage Expand distribution in Russia Grow use of acoustical ceilings in China 4 Best-In-Class Service/Quality Build manufacturing plant in Russia Expand manufacturing capacity in China 5 Disciplined Premium Pricing Continued new product development plus manufacturing investments in developing markets 1