Canadian Solar Inc. (NASDAQ:CSIQ) Q4 2022 Earnings Call Transcript

Yan Zhuang: Yes. So I think overall speaking, we still believe that polysilicon costs will continue to go down. It may not I would not — we don’t believe the cost will come down will collapse, right? It will go down gradually because we’re in the market that demand is still growing fast. And also the market is price elastic. So on cost going down, demand going up even more. So however, we also understand there are complexities on the supply chain. It’s not that everything moves in a perfect pace. So there are some material may have certain shortage in certain time. So that may create a certain complexity. But overall, I think our margin will be in a better situation. It works actually better for module manufacturers this year.

Operator: Our next question is from the line of Brian Lee with Goldman Sachs.

Brian Lee: Maybe as a follow-up to Phil’s question just in the context of — it sounds like you’re expecting gross margin to improve moving through the year. Can you kind of give us a sense for what is embedded in your pricing outlook that we are hearing in certain pockets? There’s a bit of module supply building, even some double-digit pricing declines being quoted. So any kind of update real time on where you’re seeing module pricing trends and where you see quoting activity as you look out through the year?

Yan Zhuang: Okay. So module pricing actually being in the industry for 14 years. So actually, I feel less smart price pressure compared to the old times. So we do see module price coming down gradually, but we also realized that the market the industry, the customers actually are now worried more than just pricing. The reliability on supply and bankability and quality of the products, it’s all becoming important. So even China used to be the low-price market. But now we see that the customers are much more rational on pricing. There’s a last little — there’s less speculation, speculative behavior today than before. So customers are accepting index pricing. They respect your reasonable margin. So price-wise going down, but I still believe that our margin will continue to improve.

Brian Lee: Okay. Fair enough. Great. And then I know you talked about some of the CapEx mix and having customer prepayments. Can you speak specifically to the U.S. manufacturing capacity strategy sort of update us on where you stand there and if the prepayment commentary also applies to what you’re planning to build in the U.S.?

Shawn Qu: Well, Brian, this is Shawn speaking. We are proceeding well on our U.S. manufacturing plant. We’ll start with our module plan. We haven’t did any announcement yet. So give us a few weeks or maybe months in one or two months, and we will make an announcement. And the U.S. manufacturing facility, part of the CapEx will be covered by the customer down-payment. But Canadian Solar also are bringing equity capitals.

Brian Lee: Okay. Makes sense. Last one for me, and I’ll pass it on. Maybe this is for Huifeng or Ismael. Just with capital markets volatility, we’ve also seen a lot of volatility, specifically in the financing environment banking environment. What does that mean for you guys in the Global Energy segment? Are you seeing or anticipating any changes in cost of capital or capital availability, just kind of maybe level set us on the financing environment for the energy segment and what you see going forward there?

Shawn Qu: Well, Ismael, why don’t you comment first? And then Huifeng may want to add some color.