Modine starts its largest chiller plant in Texas; data-center orders topped $1 billion in a quarter
The plant runs one shift today with four 2MW lines targeted by fiscal year end, and Modine's shareholders fund that ramp on debt, with first-half free cash flow of negative $145.6 million, in a state where new data center permits have been frozen since September.
Richard Tangtwo-minute read
Modine's+1.87% — Modine, up 1.87 percent today biggest chiller plant began commercial production in Grand Prairie, Texas this month. The company announced on November 11 that the 682,000-square-foot facility, expected to be its largest Airedale chiller plant, is now making 2MW and 3MW chillers for data centers, with one shift running and a three-shift model planned 1. It targets four operational 2MW lines by fiscal year end 1. That capacity answers a record order book, but the ramp spends cash first, and the plant sits in the one state whose permitting politics now hangs over new orders.
The order book is booked; the new lines are not
Demand is real and already committed. Data center orders passed $1 billion in a single quarter for the first time, a fourth consecutive record, and one hyperscaler committed to more than $400 million of custom air handling units running through calendar 2027 2.
Revenue is still compounding: $647.2M to $994.4M in seven quarters
Data
| Revenue | |
|---|---|
| Q1 '25 | 647.2$M |
| Q2 '25 | 682.8$M |
| Q3 '25 | 738.9$M |
| Q4 '25 | 805$M |
| Q1 '26 | 954.4$M |
| Q2 '26 | 874.1$M |
| Q3 '26 | 994.4$M |
Chillers get ordered when a project is far enough along to need one, so the backlog sits in halls already permitted. Lines two through four fill only if the next set of projects gets approved. Wells Fargo+0.49% — Wells Fargo, up 0.49 percent today estimates Texas holds about 27% of planned US data center capacity; permits there have been frozen since September pending an audit; and the governor-elect won on November 3 after vowing "a moratorium, a ban, on all data center approvals" 3.
The margin has to close the cash gap
Data Centers sales rose 95% to $439.7 million in fiscal Q2, but segment gross margin fell 470 basis points to 19.7% on higher material, component and tariff costs 2. Segment EBITDA margin slipped to 15.4% from 18.1% a year earlier, against management's promise of at least 20% by the fourth quarter, while first-half free cash flow was negative $145.6 million on $573.7 million of net debt 4. New lines add fixed cost and working capital before they add margin. The shares hit a 52-week low of $99.61 after the earnings miss 5.
Modine's data center EBITDA margin must rise from 15.4% to its 20% target
Segment EBITDA margin fell to 15.4% and management has promised 20% by fiscal Q4
- Data Centers EBITDA margin
- Estimate
Data
| Data Centers EBITDA margin | |
|---|---|
| Q2 FY2026 | 18.1% |
| Q2 FY2027 | 15.4% |
| Q4 target (estimate) | 20% |
What to watch on November 18
The investor day on November 18 is where the 20% marker gets defended 4. Two things decide whether this plant pays for itself: the fill rate on lines two through four, and whether cash flow turns positive before Texas policy reaches the order book. Modine is doing the builder's work the AI chain needs, turning demand into physical cooling capacity; its reward depends on orders it cannot yet book.
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