Air Products and Chemicals, Inc. (APD) Earnings Call Transcript & Summary

Great. Well, good morning, everyone, and welcome to our 21st Annual Chemical Conference, our 13th Basic Materials Conference. It is my pleasure to kick off the conference with Air Products' CEO, Seifi Ghasemi. Seifi, good morning. How was your Thanksgiving break?

Good morning, P.J. Pleasure to see you, and good morning to everybody else who is on the line. I had a wonderful Thanksgiving. Thank you very much. And how was yours?

Mine was great. It was quiet at home. I was getting ready for the conference.

Okay. Great.

Well, given that we have limited time, I would like to jump into our Q&A session. And I have some -- about 10-or-so questions lined up. We have 45 minutes. What I would also like to encourage viewers that at the end, e-mail me the questions. There is a link on the website. Please email me the questions, and I'll read them out here as we go. So I would really appreciate your feedback here.

So Seifi, first, can we set the stage by you describing volumes and utilization trends that we are seeing in different geographies. Talking to investors, they seem to be concerned about these new fresh lockdowns and how -- what the impact it's having on the recovery that was already taking place. So can you just talk to us about state of the industry?

Sure, P.J. We had our conference call on November 11. And I will repeat what I said at that time. But we saw, as of November 11, what we saw was that our volumes in Asia, they're back to normal. I mean, over there, they have conquered COVID, you can say. So we are doing fine in China, in Korea and Taiwan and all of that part of the world. That is about 35% of our business in total. Then in Europe, our on-site business is obviously okay, but our merchant business, we mentioned that it was about 10% -- 10% to 15% of -- mainly because we do have a lot of exposure to the packaged gases business and that business obviously gets affected with any kind of a lockdown on all of that. And then in the United States and in Americas, our volumes are down about 5% versus last year. But the reason they are not done as much as in Europe is because we don't have exposure to packaged gases business in the U.S. So that's where we were as of November 11.

Okay. And one question that I've been getting -- let me get that out of the way, and you mentioned that a little bit about on your fourth quarter call. But on the topic of COVID-19, these new vaccines, particularly the one from Pfizer, needs to be stored at extremely low temperatures like minus 94 degrees farenheit. And Air Products and industrial gas companies, you guys are the best at handling low temperatures. So could that be a decent chunk of business for you?

P.J., on that one, I'm happy that you asked the question. We obviously have a lot of expertise in handling cold materials, all the way up to almost absolute 0. We have been working, quietly, with the drug companies and with the governments in trying to come up with the ideas about the logistics of how you can keep these things cold and distribute. We are doing that. We have provided our expertise and, quite honestly, in line with our higher purpose, our intention is not to make a lot of money on this thing. Our intention is to provide the service so that we do something good for the communities. We are very much involved. We are very much in the process. We are doing whatever we can, big organizations like CGA and all of that. But at the end of the day, I would like to say that I don't expect this to be a significant incremental addition to Air Products bottom line. That's not why we are doing this thing. We are doing it because it's the right thing to do.

Great. Can you give an update on Lu'An, your largest customer in Asia, have they restarted their plant and taking a step back? You have all these contracts all over the world. And if you have to enforce a contract in a country like China, what's your experience there? Have you ever had a case where you had to enforce a contract? Or have you lost a case in a place like China?

Well, P.J., in terms of an update, I told everybody where we were on November 11. So I don't want to keep an update as of today and so on. We told everybody that we will update them when we announce our results in January. In terms of enforcing the contract, we have been operating in China now for 32 years. We have never had an issue in terms of enforcing the contracts. So I don't see us having any issues reinforcing the contract. With Lu'An, we were very transparent with the -- with our investors that the plant is shut down, and we told them that we will update you in January about what is the latest status with that. But with Lu'An, it's not a status of enforcement of the contract or anything like that.

Yes. It's a brand-new $3 billion plant that was built in, what, 2018, was making money, was running. So investors are expecting that client should fully come back online. It's just a matter of when, not if.

Well, that's obviously our hope. That plant has been running since 2017. It's a very profitable contract for us. And they had no issue. We brought the plant on a stream on time. And we ran it for 2.5 years and then shut it down for a scheduled shutdown. These plants need to have regular maintenance every 3 or 4 years, and that was completed as of the end of September. Customer has been paying us as of the end of September, so there is no issue in there. But we just wanted everybody to know that the plant is currently shut down. Okay?

Great. And then let me move to Jazan, another deal that has caused some consternation among investors. It's an $11.5 billion deal that is getting delayed. Understand that it is a large deal with lots of papers to sign. COVID has delayed a lot of these things because of lack of personal meetings. How do you get comfort that the deal is going ahead and you will realize that earnings power from that deal?

Well, on November 11, I wanted to make sure that the investors don't get the comfort that this deal is going to go ahead. In the sense that I told them that as I have been telling them for the past 6 months, I mean, I've used very strong language. P.J., I said, "Don't count your chickens until they are hatched." Because this is a big acquisition. And with big acquisition, there comes a time when sometimes you can do a deal and sometimes you can't. And as of November 11, we were in a situation that I wasn't sure whether the deal is going to get done. And if anything happens, we will update you at the right time, which is, again, in January. But we just wanted to be very transparent with the investors that, obviously, the deal is delayed and delayed, but it's also possible that it might never happen.

And in that case, let's say, take the extreme possibility that the deal doesn't happen, where do you reinvest that money? What are the alternatives? And how long of a delay do you see in the process?

P.J., on that front, we have no concern on that because we are working on a very large backlog of projects. Our strategy of focusing on gasification, carbon capture and hydrogen for mobility is a long-term 20-year strategy that we are implementing. We implement that despite -- we don't run the company based on what the stock price is next week. We run it based on a long-term strategy. That strategy is in place. It's paying off. We have plenty of places to deploy the cash in gasification, carbon capture and hydrogen for mobility. So I have no issue that the $2.5 billion that we are going to spend in Saudi Arabia on Jazan as equity participation, we will be able to deploy it another place. Now obviously, there is a downside in the sense that if we do the Jazan deal, the earning power for that will be in 2021 and '22, while if we deployed on a new project, it will be 2 or 3 years later. So on a short-term basis, obviously, there is a dislocation. But on the overall thing, when you look at it in the next 20 years, it doesn't really matter.

Right, right. And you mentioned, I think on the call, that you would rather announce now new deals when they are signed and done. What are your thoughts there? I mean, at what stage would you announce any new deal now?

We have learned a good lesson, P.J., that we should not get enamored with people wanting to make brand announcement. I mean, the Jazan thing, we didn't want to make any announcement. It was Saudi Aramco who made an announcement because they were going public and they wanted to show they were doing a very big project. So we have learned a very good lesson. And from now on, we will be very cautious in terms of when and at what point we announce projects so that we don't raise expectations and then have to work it back.

And I'm going to come to hydrogen economy and other questions. But does it concern that NEOM is also in Saudi Arabia, and it's a much bigger project that you've announced, and it may have similar issues? It may not have similar issues, but it's in the same country. Does that concern you?

No, it doesn't. It's a different project with a different group of people at a different location. I mean every project has its own dynamics. I mean, obviously, with the NEOM project. It's a very, very high visibility project, and it's getting a lot of visibility, and it even got a lot of visibility at the G20 Summit. As I'm sure you have seen, that people have seen, about the statements which were made by His Majesty, The King of Saudi Arabia.

All right. And let's talk a little bit about the hydrogen economy, which is going to be a big opportunity for you and many others. And before I get into NEOM, can you talk about where do you see price of green hydrogen versus blue versus gray hydrogen? You talked about that when you announced the NEOM project, but want to get an update, what's the cost of making these? And how do you see that trending in the future?

Well, I'm glad you mentioned gray hydrogen, blue hydrogen and green hydrogen. That's -- it's very important to keep that in mind. The gray hydrogen, obviously, it is made locally. We make that. All over the world, we are the largest producer of gray hydrogen, made from natural gas and the cost of that is very well-known. It's -- I don't need to go through that. Everybody knows that. When you talk about the next stage that is making hydrogen, where you capture the CO2 when you are making it, that we think, the blue hydrogen -- that would obviously have an additional cause of the capturing of the carbon and sequestering. That is obviously a significant cost, but the blue hydrogen will be more expensive, and that will be converted for transportation. It will be converted to ammonia. And I think, right now, you have heard a lot about the fact that Japan is very focused on that in terms of using blue hydrogen, which is blue ammonia to blow into their power plants and produce -- and reduce the carbon emission from the power plants. And then we get to green hydrogen, which is obviously the ultimate in terms of production from wind and solar to produce the hydrolysis of water. The cost of the green hydrogen is very much dependent on the cost of the electricity that you produce. And that one -- I mean, a lot of people are saying we'll produce it locally. But if you want to put hydrogen in a truck in Munich, it's kind of difficult to find wind and sun to produce hydrogen in Munich. So you have to bring it from somewhere else. And we think that places like Saudi Arabia or other places, where there is a lot of sun and wind and other means of producing green energy, green electricity at a very low price, then they will be very economical.

I think you mentioned that green -- price of green hydrogen today is something, like, $10 to $12 in that ballpark or could be higher, and at that price, you can make a good return on your project. And over time, it's expected that prices could come down. And obviously, cost would also come down in that case. Can you just talk to us about how do you see these prices and costs changing over time because it is such a new technology?

What I think is that the price might not necessarily come down. P.J., it depends on supply demand. I mean, it's just like oil. Oil can be $20 a barrel or it can be $200 a barrel, depending on supply demand. So I think that in case of green hydrogen, it is going to be very much dependent on supply demand. I mean, if some of the countries do what they are saying they are going to do. Like, for example, if the European union implements the policies that they are talking about, the demand for blue hydrogen and green hydrogen will just sky rocket which means that the price will appropriately go up. I mean the price of the commodity of a product like green hydrogen is not dependent on what it costs you to make it, it depends on what is the supply/demand. And we are very bullish that actually prices might actually go up rather than go down as we go forward.

I have a question for you on the U.S. Obviously, it looks like Europe is a little ahead of the U.S. in this, but we have a new president-elect who has laid out a green plan. Does that change? Do you think that will change your speed of projects in the U.S., maybe on the Gulf Coast or California? Whether it's blue or green hydrogen?

Well, I think that fundamentally the drive for these things is overall public opinion in different parts of the world. I think, right now, in the U.S., we have had a change of administration, but I have to see that the population in terms of public opinion was divided almost 50/50. So I don't know what the new administration is going to do. We are not hanging our head on the basis that, "Well, we got a new president, and now he's going to do this and that." We are going on a long-term basis. And I think the trend is going to be that public opinion in time will force the issue of climate -- of global warming, and therefore, we will move towards blue hydrogen and especially green hydrogen on the long term. Right now, obviously, Europe is ahead of the United States. And I think that, in time, probably a lot of other places will be ahead of the U.S.

Are you working on any specific projects on the Gulf Coast? Are you looking at any projects? I know you don't want to announce any projects, but I mean can you just talk about the pipeline when it comes to that?

P.J., let me say it this way. We are working on a lot of projects everywhere, including the Gulf Coast. Yes.

Okay. Now on the NEOM project. It's a $3.7 billion project for you. Can you update us on where you are in the planning stage? And the downstream park, which is what Air Products will handle on its own, the shipping green ammonia and then taking it into different countries, like Germany, transporting it and turning it back into hydrogen. What is the size or scope of that project? And what sort of -- are you talking to different customers in terms of contracts? And can you give us any update there?

Well, I'll be happy to give you the update in the following day. Obviously, we are working on the projects. We are engineering it. We are finalizing the sites. We are finalizing the size of the plant and all of the things that you would expect us to be doing. We are -- we have identified how we are going to ship it, where we are going to and unload it and all of that. In terms of customers, yes, we are talking to customers about the possible use and all of that. I don't want to get specific about which customers, where and all of that. But we definitely are getting ourselves ready for January of 2025 when we are going to be selling, hopefully, 1 million, 1.2 million ton a year of green ammonia. And I'm as optimistic as I've ever been about the project and the prospect, in general, for hydrogen.

Okay. You mentioned that you are not in the cost-cutting mode but you're in growth mode. I think that's what you said on the 4Q call. How should we think about your EBITDA margins of, currently what, low 40%? How high can they go? And when the -- you add these new projects from the pipeline, what happens to the EBITDA margins initially and then how they trend over time?

Well, the comment that I made about cost-cutting mode, we always watch our cost and there is no question about that. But I just wanted to make a distinction that we are at a different place than we were in 2015 where we were trying to significantly reorganize the company and all. Our margins of about -- around 40%, I think, are sustainable. If we do some of these very big projects, it is possible that those margins might improve, but I don't want to get ahead of ourselves. But 40% margin is a pretty high margin. We have to work very hard to maintain that. We do that every day. And you can see where we are compared to other people. We are almost 10% ahead of everybody else.

Great. And one question I do get from investors is about return on capital. You talk about at least 10% return on any new project. But how do you adjust risk operating in Saudi Arabia versus China versus Indonesia versus the Gulf Coast? I would imagine your 10% return is risk adjusted. But can you talk to us about what kind of risk premium do you -- how do you build that in?

Well, the 10% is a very quick rule of the time guideline that we have told people that if we invest $10, expect $1 of operating -- I mean, operating income. Our goal, P.J., is 15% return on capital employed. That is where we want. And Air Products today, when we report our numbers, I think we report 11.6% or something like that. But in the real word, if you adjust for the cash that is sitting on our balance sheet, we are almost there. We are almost there. So that is the ultimate goal. Obviously, when we do projects in different parts of the world in this risk adjustment. We don't have the -- we don't do the same return. But we adjust risk not so much by the country but by the customer because there is a difference. I mean, you can do a project in the U.S. Gulf Coast with your partners with 3 guys and a dog, and that has a lot more risk than doing a project with the government of Indonesia. But -- so we kind of adjust for that. But at the end of the day, we want Air Products to have a return on capital employed of at least 15%. That's our goal.

Great. The European new green deal, new opportunities there. Can you talk about that? And also wondering about any DCAP opportunities? You had a great deal with PBF that was kind of a unique when oil prices were low, but do you see more of those deals around the world?

Well, first of all, in terms of Europe and the new green deal and all of that, I think they are doing the right thing. They are on right trajectory, and I see significant opportunities there, and obviously, we are involved in auto. In terms of the second part of your question, can you just tell me exactly what you want me to address...

The PBF -- the deals like PBF, the DCAP.

Making comments on -- there are opportunities. A lot of people own assets that are not core. I mean, we have companies, like, some of the big oil companies. Half of the hydrogen is produced by us, but then half of it is produced by themselves because they have a plan. It makes a lot of sense for them to do what PBF that -- and that would make it more efficient for them and it would be good for us. But these things takes a lot of time and effort to happen, and I always explain that the biggest obstacle is the actual people who are the operators, they don't want to let go of their assets. The corporation wants to get rid of core, noncore assets. But the refinery manager necessarily doesn't want to let go of his hydrogen plant. So there is -- but I don't want to rule out possibilities, P.J. There are possibilities. We are looking at that, but it's not so easy to make them happen.

Right. And then going forward, can you talk about priorities for cash? And if there are any delays, like what we had here, would you consider stock buybacks as an interim place to put cash before we get to the next project?

P.J., the way we look at the cash that the company generates, we believe that about half of the cash that the company generates should be given back to the investors in form of dividends and the other half invested to grow the company. That's what we are doing. I am not and I have never been a very supporter of buying back your own shares because that is a very inappropriate way of propping up your EPS and also when companies spend their money buying their own shares, that means that they don't have any growth opportunities. So I would worry about those kind of companies for the long term. So we are fortunate we have a strategy where we -- and we have the competency and we have the strategy to deploy a lot of cash. Therefore, I don't think we're getting the stage that they will have a cash piling up and besides that, if cash starts piling up, another good day of getting -- doing a thing is pay higher dividend. And we have been increasing our dividend consistently. Air Products has raised this dividend for the last 35 years. And in the last 6 years that I have been with the company, we have consistently raised our dividend on an average of 10% a year. And I believe in that, and we will continue to raise our dividend. So that's how I look at their use of cash.

Okay. And I know I'm getting a lot of questions here emailed. But before I go there, one last question for you, is -- as we have these fresh lockdowns in U.S. and Europe, do you think the industrial recovery that we had going on before in autos and in other areas, do you think that will power through this slowdown that people know what this virus is, they're kind of comfortable with it, and so this second lockdown should not have as much of an impact on the recovery? Would you agree with that statement?

Yes -- I don't know. I'm obviously always an optimist and think that we can kind of deal with difficulties. But I also look at China, I mean they were able to manage this thing. I mean, with the proper attention and proper behavior by the people, you can control this. It doesn't have to be the way it is in the U.S. I mean, here it is a nation of 1.5 billion people and they have 5 cases a day; and we are 300 million and we have 200,000 cases a day. So it can be -- and I think we will end up managing that the vaccine is coming. So I am an optimist about what is happening. And one other thing that I don't need to tell you, you know this better than I do, that if you ever get this thing under control, there is a significant pent-up demand. People have saved money. They haven't gone on vacation. They haven't done a lot of thing. And once they come out, I think they might actually overdo that. And I think that's why the market is actually anticipating that and you are seeing a great run on the Wall Street.

Great. Well, I do want to get to the questions from investors, which is very important. So I'm going to read them out here. The first question is, how is your strategy pursuing higher return projects affected by current macro considerations and the current investment cycle, investment/capital cycle?

Well, we are -- as I said, we see significant opportunities for hydrogen, whether it is blue hydrogen or green hydrogen. And I think the momentum will increase, a lot of people are waking up to that. We will -- you will see a lot of people making a lot of announcements and all of that. How much of that will materialize or not, we will see, but we are in a great position. I'm very happy that Air Products decided with our strategy for hydrogen 5 years ago about where we want to go. And we are, I think, about 4 or 5 years ahead of everybody else. But we are very excited about that. I think that is going to be, I think, of the king of the future.

Great. The second question I have here is, where do we stand on the, at least, 10% EPS growth, which I think, in October, you guys said that you could do despite COVID?

Well, we have said that over a cycle of a few years, we will get an EPS growth of 10%. Since for the past 6 years, we have achieved that. We have charts and graphs that you can see that even including 2020, where our growth versus the other year was only 2%, if you compare to 2014, we have increased our EPS 10%. And that is our goal as we go forward. For the next few years, we are committed to deliver that.

That's good to hear. My next question is, with regard to Lu'An, can you clarify if the customer has resumed payments? And if so, are they paying a regular fee or a reduced fee?

As I mentioned, I said what I needed to say about that in -- on November 11, and I don't think it's appropriate for me to kind of give you an update on that because next week, I have another conference call and another conference call. We will give you an update in January when we announce our results about exactly where we are and we will be as transparent with you as we were in November 11.

Great. That's clear. The next question is, P.J., can you ask him about captive projects? Similar to the PBF project, how does the backlog compare today versus a few months ago? And has the bid-ask widened for these, given the multiple that you and your competitors are treating it? Are the sellers widening -- wisening up to what AP should pay for these projects?

That's a very interesting question. I guess the question is that if you're trading at 16x EBITDA, why would then somebody want to sell you at anything at less than that. But the thing is that when we buy these things, it's not only the multiple of the EBITDA, it's all of the other things that we can do for the customer to create value for them. We can -- in case of PBF, we have hydrogen plants next to their hydrogen plant when we bought it. So there is a lot of things which is involved. But we have had success about these. And right now, actually, when you think about Jazan, what are we doing? It is an asset-buyback. And the customer -- one of the reasons that Jazan is delayed is because the customer is asking the same question you're asking. He was saying, "Well, maybe you're making too much money in terms of that." The dynamic is always there, but we think there is additional opportunities to do things like that.

Okay. Another good question here. Do you expect macro normalization brought on by vaccine deployment globally to be a catalyst what Jazan is just to be ironed out in second half of 2021? So would the vaccine -- sorry, go ahead.

Jazan -- the COVID thing has had a role in delaying the project. But whether the project will happen or not is not related to the vaccine, it's related to the expectation of return on our part and Saudi Aramco's part. You see, there is 2 issues. The COVID has delayed the transaction. But the real issue is, we are asking for a certain return. We thought we had negotiated that, and they had agreed to that and they are looking at it in a different way, so -- in the last minute. So that is the issue. It's not COVID related, it's expectation of return.

Great. Another good question on hydrogen and your competition with oil majors. Some oil majors have openly stated that their business will be in decline as early as 2030. And how do you think about the competitive dynamics in hydrogen, given that the majors are comfortable with the ROC that is much, much lower than 15%?

Well, they are comfortable with their returns at much lower than 15% and that is why they are trading at about 5x EBITDA. I think that the opportunity for hydrogen is going to be huge. I do not expect Air Products to be doing all of the project. I think many people will get into that business. I wouldn't be surprised if some of the big majors would get into that business, too. We compete with people today, they will compete with them then. And if they want to have lower returns, they can go get the lower return projects and we will focus on the higher return projects. So I don't expect that we will be on our own. We will have a lot of -- I actually think that the question is very relevant because I really don't consider our current industrial gas competitors at our competitors in the long-term on hydrogen. I think the competitors in the long-term in hydrogen will probably be lower majors, but we welcome that. We welcome competition. That's a good thing for everybody.

Right. The next question is, can you describe your base hydrogen business? And I think what they're trying to say is the refining business is hurting, Maya 2-1-1 margins are at very low point, not improving much in 4Q, it seems like. And so at that point, what is -- the refiners may not have as much incentive to use as our crude that may not need as much hydrogen. So can you describe the base business today with your refining customers?

Our base business today is actually -- has stayed robust even during the COVID thing. And as the gasoline demand goes up, it will do very fine. I mean, we are seeing that in China, for example, one of the things that COVID did once it got under control, actually, gasoline demand went up because people were -- didn't want to use mass transportation. They were driving their own cars. So I think in the U.S., there might be some kind of a dynamic on that, too. But our base business for hydrogen has not suffered even in the U.S. Gulf Coast that much.

And the next question is on coal gasification technologies. Obviously, you have GE and Shelf Technologies. You're going around building these gasifiers. The new one in Indonesia, is that sort of what are the risks there? And then I think on the call, you talked about an active bidding project in India, and I'm sure everybody is interested in that. What's the status there? And I guess the long-term question on coal gasification is, as people move towards green energy, I guess, is there still as much interest in gasification or maybe the countries that have coal are interested in gasification?

Absolutely. Because the thing is that people are moving towards hydrogen and clean energy and all of that, but that is mainly the western world. When you are talking about countries like India and Indonesia and all of these people who are beginning to have a significant migration into the middle class, they are going to be in need of energy, and that energy is going to be hydrocarbon base, despite all of the noise. So I actually see the need for hydrocarbons continuing for a long time, despite all of the talk about hydrogen. Those countries are Indonesia, India and China. They are significantly focused on 2 things: number one is national security. That is -- if anything happens to oil, I mean, right now, if you are sitting in China, they are still promoting coal gasification. It is part of the 14 -- their 14th 5-year plan because China is concerned that if anything happens with the U.S. and the State of Málaga is closed, you can't get oil to China. So they are promoting that. Same thing in Indonesia, same thing in India. And then the other thing is a question of foreign currency. I mean if you have a significant amount of coal and you're selling on top of that, if you can convert that to chemicals and diesel fuel, you don't have to import oil. So I see India, Indonesia, China and other places that have coal to continue to push for using coal, and therefore, we are very optimistic about our gasification projects. And then as we go forward, I can clearly see a coal gasification facility in Indonesia, where we can capture the CO2 and sequester it, and therefore, now we have the syngas to make blue hydrogen, which can be converted to blue ammonia, which can be sent to Japan in order to promote the reduction of the CO2 emission. So there is a lot to be done there, and I'm very happy that we are there. We are in a very good place. We have the relevant technology. So I'm very optimistic about that, too.

Great. So my question is you're doing a lot of these big engineering projects, like, these are big projects, whether it's Indonesia, whether it's NEOM, and then you are taking on other projects on the Gulf Coast. Some are smaller, some are much bigger. There is risk with bigger projects. Are you -- I mean, do you have the engineering talent? Are you adding to your number of engineers that you are hiring or recruiting to be able to do all these projects at the same time and do them correct and that's what Air Products' culture is and history is?

P.J., I'm glad you asked the question. We are obviously in a growth mode and that I think it's okay for me to say that in the last year, we have added close to 1,700 people to our workforce, mainly engineers and all. That's a lot of people. We have a great team headed by Dr. Serhan, our Chief Operating Officer, who is really on top of these projects, we obviously -- we need to execute these projects on time, but we are growing. As I said, we have hired about almost 1,500, 1,600 just in the last year, and we will be hiring some more in order to go forward. I'm very happy that we don't have any issues hiring people. People seem to like to come and work for us, and we are more than happy to have them, and we are having access to talent. And so we are very focused on execution of this project because that is really under our control, and we need to do it properly.

Great. One quick question on LNG heat exchangers. Obviously, you've seen some -- won some new projects, but also if we're going to transport ammonia, hydrogen around the world, I mean, that will need some heat exchanging capability and some cooling capability. I mean, so it may not be necessarily an LNG project, but these heat exchangers that you have the core expertise in could be used in other areas as well. I mean, can you talk about the LNG business and what could happen to it in the future?

Well, we are optimistic about our LNG business. Our LNG heat exchanger business -- I mean, we are not in the LNG business. We are in the business of making the heat exchanges to produce LNG. We are -- that business is a cyclical business. I mean, we have, I think, publicly disclosed that, that business was making about $150 million of EBITDA for us in 2015. Then the cycle came down. And in 2018, it was making nothing. Then we had to obviously do a lot of other things to make up for that loss of EBITDA. Now it is back on the up-cycle. And we are very optimistic about that business in 2021, '22, '23, '24, because we have actually gotten a lot of orders and we expect some more. So we are very bullish about that, and we think that we will reach those kind of levels again in the next few years.

Great. I have one question here. I do not fully understand the question, but let me ask you anyway. What lies ahead for Air Products given the high multiple the stock is trading and the high EBITDA margins compared to the industry? And what risks could come from competition? I think you kind of answered that anyway, but anyway, that's the question that came in.

Well, the thing is that the reason -- I mean, the reason that we are trading at a high multiple and all of that is because we have transformed ourselves into a growth company. Not only we have fixed the business, and we are having on a day-to-day business, I mean how many chemical businesses do you have which has a 40% EBITDA margin. I mean -- so we are performing. And at the same time, we are a growth company. And that is why we are trading at -- and we deserve that. I mean, there are a lot of other companies that are trading at even 40x EPS, 45x EPS. I mean, look at Tesla. I mean, what is that, 100x EPS, I mean. So we are -- I think we are getting the credit for not only being a stable company and we have shown our stability during the COVID crisis. I mean, at the end of the day, in 2020, we have the world shut down, we delivered EPS which is higher than 2019 when the world was normal. So we are a stable business that has a premium, but in addition to that, we are a growth business. We have a backlog of $15 billion of businesses that are going to translate into EPS in the time to come. So I think we deserve that. And I think we need to continue to perform and maintain that, and hopefully, those multiples will become even better.

Great. Well, we're almost out of time here, but I do want to ask you one personal question. I know, Seifi, you work hard. You're almost a workaholic. You work long hours. What do you do for fun and what's the plan for the holidays?

Well, what I do for fun is, I work. I love what I do. And I quite honestly, there is nothing more enjoyable for me to get on -- to be with our people. And now to get on a conference call with our people and our customers and to see something done. That is what drives me. At my age, I don't need any additional fame and I don't need additional money. But I do it because it is -- I love it. It's a lot of fun, and I'm very happy that I have a great team that helps me have that. But in terms of what I do for fun, I mean, I'm going to sound a little bit off the wall, but I love reading books, and I love listening to the opera. I'm going to the opera. Now listening to the opera, I can do -- I cannot go to the opera. And reading books I can always do, but those are my kind of hobbies, but my greatest hobby is meeting with our people and trying to see projects like -- all of the projects we talk about become reality. That's really keeps me going every day. But thanks for asking, P.J.

Great. Well, Seifi and to the entire Air Products' team, well, thank you for participating. I wish you the best into year-end and for the holidays, and good luck.

Thank you very much. Same to you and the audience, and very nice questions. Thank you. Thanks.

Thank you. And thanks, everyone, for dialing in.

Thank you.