Owens Corning

6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

Machinery and equipment includes certain precious metals used in our production tooling, which comprise approximately 7% and 10% of total machinery and equipment as of December 31, 2024 and December 31, 2023, respectively.

6. PROPERTY, PLANT AND EQUIPMENT (continued)

Our production tooling needs in our Composites segment are changing due to a strategic shift in the Company's metal ownership portfolio, as well as, in response to changes in economic and technological factors. As a result, the Company sold certain precious metals resulting in gains of $19 million for the twelve months ended months ended December 31, 2024. There were no significant sales of precious metals resulting in gains or losses during the twelve months ended December 31, 2023 and December 31, 2022. These gains are included in Other expense, net on the Consolidated Statements of Earnings and are reflected in the Corporate, Other and Eliminations reporting category. The cash proceeds from the sales are included in Net cash flow used for investing activities in the Consolidated Statements of Cash Flow.

From time-to-time we also exchange certain precious metals used in production tooling for certain other precious metals to be used in production tooling. There were no significant non-cash exchanges during the twelve months ended December 31, 2024 and December 31, 2023. During the twelve months ended December 31, 2022, these non-cash exchanges resulted in a net increase to Machinery and equipment of $18 million and gains totaling $18 million. These gains are included in Other expense, net on the Consolidated Statements of Earnings and reflected in the Corporate, Other and Eliminations reporting category. These non-cash investing activities are not included in Net cash flow used by investing activities in the Consolidated Statements of Cash Flows. We do not expect these non-cash exchanges to materially impact our current or future capital expenditure requirements or rate of depletion.

During the fourth quarter of 2024, the Company determined that certain asset groups should be tested for recoverability, primarily as a result of the progression of the strategic review of the glass reinforcements business. Recoverability of the long-lived assets was measured by comparing the carrying amount of the asset groups to the future net undiscounted cash flows expected to be generated by the asset groups. Specifically for the glass reinforcements asset group, the Company used an undiscounted cash flow model giving consideration to probability weighted cash flows of differing outcomes of the strategic review. The comparison indicated that one of the asset groups, the glass reinforcements asset group, was not recoverable.

Fair value of the glass reinforcements asset group was calculated using a discounted cash flow model and market information obtained through the strategic review to estimate the fair value of the asset group, with weighting applied. As a result of the analysis performed, the Company recorded pre-tax asset impairment charges for the amount by which the carrying value exceeded its fair value of $483 million for the year ended December 31, 2024 which is included in Impairment due to strategic review on the Consolidated Statements of Earnings. These charges include $439 million related to property, plant and equipment, $30 million related to operating lease right-of-use assets and $14 million related to definite-lived intangible assets.

The primary assumption used in the fair value analysis was the weighting of the discounted cash flow model and market information. The fair value measurements are classified as Level 3 within the fair value hierarchy as defined in ASC 820, "Fair Value Measurement" due to the unobservable inputs used.

For the years ended December 31, 2024, 2023 and 2022, depreciation expense was $503 million, $481 million and $447 million, respectively, which includes depletion expense related to precious metals used in our production tooling. In 2024, 2023 and 2022, depreciation expense included $13 million, $76 million and $26 million, respectively, of accelerated depreciation related to restructuring actions further explained in Note 13 to the Consolidated Financial Statements.