Property, Plant, and Equipment, net

12 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

The components of property, plant, and equipment, net consisted of the following:


	September 30,
(in thousands)	2023		2022
Land	$	—	$	995
Building	—		8,805
Equipment	31,658		29,224
Furniture and fixtures	1,576		1,394
Computer hardware and software	3,220		3,230
Leasehold improvements	9,442		6,851
Construction in progress	2,508		4,130
Property, plant, and equipment, gross	$	48,404	$	54,629
Accumulated depreciation	(32,887)		(30,053)
Property, plant, and equipment, net	$	15,517	$	24,576

Depreciation expense totaled $2.7 million and $1.4 million during the fiscal years ended September 30, 2023 and 2022, respectively. During the fiscal year ended September 30, 2023, the Company sold certain equipment and recognized a gain on sale of assets of $1.1 million.

During the fiscal year ended September 30, 2023, for the reporting unit formerly known as Aerospace & Defense, an indication of goodwill impairment (after electing to quantitatively test goodwill) was a trigger to test long-lived assets. 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. The comparison indicated that the assets were recoverable.

During the fiscal year ended September 30, 2022, there was a triggering event of negative cash flows and operating losses at the FOG asset group level within the Inertial Navigation product line that indicated the carrying amounts of our long-lived assets may not be recoverable. In accordance with ASC 360, with regard to our long-lived assets, we performed an undiscounted cash flow analysis and concluded that the carrying value of the asset group was not recoverable. Accordingly, we then performed an analysis to estimate the fair value of the other long -lived assets and recognized an impairment charge within operating expenses of $3.0 million against the FOG property, plant, and equipment by the amount by which the carrying value of the asset group’s other long-lived assets exceeded their estimated fair value for the fiscal year ended September 30, 2022. Key assumptions utilized in the determination of fair value include expected future cash flows and working capital requirements. While we believe the expectations and assumptions about the future are reasonable, they are inherently uncertain.

On December 13, 2022, EMCORE Chicago consummated the sale of the real property interests in the Tinley Park Facility to 8400 W 185TH STREET INVESTORS, LLC (the “Tinley Park Buyer”), resulting in net proceeds of approximately $10.3 million, pursuant to the terms of that certain Purchase and Sale Agreement (the “Tinley Park Purchase Agreement”) dated as of November 1, 2022, by and between EMCORE Chicago and HSRE Fund VII Holding Company, LLC, an affiliate of the Tinley Park Buyer. In connection with the sale of the real property interests in the Tinley Park Facility, we entered into a long-term Single-Tenant Triple Net Lease (the “Lease Agreement”) with the Tinley Park Buyer pursuant to which we leased back the Tinley Park Facility for a 12 year term commencing on December 13, 2022, unless earlier terminated or extended in accordance with the terms of the Lease Agreement.

Geographical Concentrations

Long-lived assets consist of land, building, property, plant, and equipment. As of September 30, 2023 and 2022, approximately all of our long-lived assets were located in the United States.