(5) Property, Plant and Equipment, Net

Depreciation expense was $9.7 million and $11.6 million for the six months ended June 30, 2026 and 2025, respectively.

On April 8, 2026, an explosion occurred at the Company's manufacturing facility in East Providence, Rhode Island that resulted in damage to a portion of the facility's production space, including certain of the Company's property, plant and equipment, and the temporary cessation of operations (the April 2026 Incident). Refer to Note (15), East Providence Incidents, for further information regarding the damage to certain property, plant and equipment and related insurance recoveries.

In February 2025, as part of a restructuring plan, the Company decided to cease construction at its previously planned aerogel manufacturing facility in Statesboro, Georgia (the Statesboro Plant) and demobilize the site. In connection with the same, the Company adjusted the construction in progress balance to its fair value and recorded impairment charges of $286.6 million during the three months ended March 31, 2025. The Company plans to divest the assets of the Statesboro Plant through broker-assisted sales. At June 30, 2025, certain of the assets of the Statesboro Plant met the criteria to be classified as held for sale and are separately classified on the balance sheet. At December 31, 2025, the remaining assets of the Statesboro Plant met the criteria to be classified as held for sale. At December 31, 2025, the carrying value of assets classified as held for sale was $32.7 million and a loss of $18.2 million was recorded to reflect the remeasured fair value and cost to sell, which was included in loss on disposal of property, plant and equipment in the consolidated statement of operations. The construction in progress balance at June 30, 2026 and December 31, 2025 does not include any balance for the Statesboro Plant.

During the second quarter of fiscal year 2025, the Company implemented additional actions under the restructuring plan, which included headcount reduction and rationalizing research and development programs. As a result of the restructuring plan, the Company recorded impairment charges of $1.0 million during the year ended December 31, 2025, which are included in impairment of property, plant and equipment in the consolidated statement of operations.

During the fourth quarter of fiscal year 2025, a large Thermal Barrier customer notified the Company of its lower forecasted long-term demand requirements and requested the Company submit a claim for certain losses incurred. Further, EV adoption rates are expected to be lower following the termination in the United States of certain consumer tax incentives for EV purchases. These developments have caused the Company to reassess its capacity requirements. In connection with the same, the Company revised the useful lives of certain assets to align utilization with the revised expected demand and recognized accelerated depreciation of $22.2 million. Additionally, the Company recognized $3.6 million of impairment related to construction in progress assets that are no longer needed due to the lower forecasted demand. The Company submitted the claim with the Thermal Barrier customer in November 2025. During the three months ended March 31, 2026, the claim was settled for $37.6 million which is being deferred and recognized as revenue over approximately a two-year period starting from the settlement date. During the three and six months ended June 30, 2026, the Company recognized $4.9 million and $8.4 million as revenue, respectively. The settlement amount was received in March 2026.

Fair value of long-lived assets is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved and a review of appraisals or other market indicators and management estimates. As such, the Company has determined that the fair value measurements of long-lived assets principally fall in Level 2 of the fair value hierarchy.