The company operates primarily in the United States, Canada, and Latin America, focusing on commercial and residential construction. In the commercial sector, revenue opportunities arise from both new construction and renovation of existing buildings, with the majority of sales coming from office, education, healthcare, transportation, and retail sectors. The Mineral Fiber segment, in particular, sees a significant portion of its sales used for renovation by the end-users of its products. Although residential construction represents a smaller part of the business, the company also markets products for use in single and multi-family housing, with existing home renovations constituting the majority of its residential market opportunities.

Armstrong focuses on three operating segments: Mineral Fiber, Architectural Specialties and Unallocated Corporate.

Mineral Fiber: It manufactures and sells mineral fiber and soft fiber ceiling systems, offering acoustical control, fire protection, and energy efficiency. It includes a joint venture, WAVE, which produces ceiling components and grid systems. This segment serves distributors, contractors, and retailers, managing significant corporate expenses and assets related to its operations.

Architectural Specialties: This segment designs and sells ceilings, walls, and facades for commercial use, available in materials like metal, wood, and felt. These products, which offer acoustical control and fire protection, are sold to distributors and contractors. Sales are project-driven with variable patterns, and the segment includes allocated corporate administrative costs.

Unallocated Corporate: It covers assets, liabilities, and financial activities not assigned to other segments. This includes cash reserves, retirement plan statuses, swap contracts, credit facility borrowings, and tax balances.

Since 2016 Armstrong made 11 acquisitions. In October 2023, the company acquired a business segment of Insolcorp from Albemarle, NC, focused on developing and manufacturing energy-saving products for building installations, now part of the Mineral Fiber segment. In July 2023, it acquired BOK Modern, a designer of metal facade solutions based in San Rafael, CA. Additionally, in November 2022, the company purchased GC Products, a CA-based manufacturer of glass-reinforced gypsum and cement products. The operations of BOK Modern and GC Products are included in the Architectural Specialties segment.

Additionally, the strategic acquisition of 3form aims to enhance its Architectural Specialties offerings.

Raw materials essential for production, including fiberglass, perlite, recycled paper, and starch, are sourced globally from numerous suppliers (primarily from Europe and the Pacific Rim). Additional materials like clays, felt, pigment, and wood fibers are also purchased. The company produces most of its mineral wool internally and uses aluminum and steel for metal ceilings, some of which are manufactured by WAVE, a joint venture specializing in grid products. Fluctuations in the prices of these key materials can significantly impact manufacturing costs, and given the competitive nature of the market, it may not always be possible to offset these increases by raising selling prices.

Worthington Armstrong Venture (WAVE), established in 1992, is a 50/50 joint venture that has become the North American market leader in ceiling suspension systems and integrated solutions. WAVE reported $458 million in sales in 2022 and has distributed over $550 million in cash dividends to AWI since 2017. The company operates seven plants across the United States and employs approximately 500 people.

The markets for these products face intense competition, driven by product performance, styling, service, and pricing. This competition originates both domestically and internationally, and also from alternative solutions like drywall and open plenum, where excess industry capacity often leads to aggressive price competition. Major competitors include CertainTeed Corporation (a subsidiary of Saint-Gobain), Chicago Metallic Corporation, Georgia-Pacific Corporation, Rockfon A/S, USG Corporation, Ceilings Plus, Rulon International, and 9Wood.

In 2023, around 70% of Armstrong World Industries' consolidated net sales came from distributors, with major home centers accounting for about 10%. The remaining sales were mainly to direct customers and retailers. Notably, gross sales to Foundation Building Materials, and GMS, were significant, each surpassing 10% of consolidated gross sales, and spanning both the Mineral Fiber and Architectural Specialties segments.

In the first quarter of 2024, the company reported a 5% increase in net sales, spurred by growth in these key segments. Operating income and diluted net earnings per share surged by 23% and 31%, respectively. Adjusted EBITDA rose by 16%, with adjusted diluted net earnings per share increasing by 23%. Following these positive outcomes, Armstrong raised its full-year 2024 guidance.

Overall, the company saw a 5% rise in net sales to $1,295 million, with adjusted EBITDA up by 12% to $430 million. The adjusted EBITDA margin expanded by 200 basis points to 33.2%, with the Mineral Fiber segment's margin increasing by 180 basis points to 39.1%. The Architectural Specialties segment's adjusted EBITDA margin grew by 230 basis points to 18.1%, propelled by increased sales. The company also reported a strong year-to-date adjusted free cash flow of $263 million, a 19% increase.

Intellectual property rights, including patents, trademarks, and copyrights, play a significant role in the business strategy. The portfolio includes well-known trademarks such as Armstrong®, Total Acoustics®, and MetalWorks™, which are essential for brand recognition. In 2016, a Trademark License Agreement allowed Armstrong Flooring to use the "Armstrong" trademark perpetually and royalty-free. Additionally, a 2019 deal with Knauf International GmbH involved a royalty-free intellectual property license agreement, permitting Knauf to use certain patents and trademarks in specified regions.

Armstrong has established itself as a key player in its industry across the Americas, offering its customers affordable products. The company has carved out a solid position in the market, supported by a P/E ratio of approximately 20x profits, despite modest sales and margin growth. Over the past decade, Armstrong's management has successfully expanded by acquiring smaller businesses in the same industry. However, it remains to be seen whether this strategy will continue to succeed in the next decade. Facing stiff competition, it will be crucial for Armstrong to diversify its product and service offerings to better compete with industry giants.