Q2 2020 Goldman Sachs BDC Inc Earnings Call
I would like to welcome everyone to the Goldman Sachs BDC Inc. second quarter 2020, <unk> earnings Conference call.
Please note that all participants will be in listen only mode until the end of the call. When we will open up the lines for questions.
Before we begin today's call.
To remind our listeners that today's remarks may include forward looking statements.
These statements represent the company's belief regarding future events that by their nature are uncertain and outside of the company's control.
The companys actual results in financial condition may differ possibly materially but as indicated in those forward looking statements. As a result of a number of factors, including those described from time to time in the Companys S. E C filings.
Audiocast is copyrighted material of Goldman Sachs BDC eat it may not be duplicated reproduced or rebroadcast without our consent.
Yesterday after the market close the company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the home page of our website at www Dot Goldman Sachs BDC dotcom under the Investor Resources section.
These documents and should be reviewed in conjunction with the company's form 10-Q filed yesterday with the FCC.
This conference call is being recorded today Tuesday August 11, 2024 replay purposes.
I'll now turn the call a Ritchie brothers governance, Chief Executive Officer of Goldman Sachs BDC.
Thank you Dennis good morning, everyone and thank you for joining us for a second quarter earnings conference call.
I'm joined on the call to say by John Ritter, Our Chief operating Officer, and Jonathan Lamm, Our Chief Financial Officer.
I'll begin the call by providing an overview of our second quarter results, including comments regarding the performance of our portfolio.
I'll also provide an update our proposed merger with our affiliated business development Company Goldman Sachs Middle market lending Corp., which we refer to as M.M.L.C.
John Your will then discuss our portfolio in more detail with respect to the current environment before turning over to Jonathan Lim to walk through a financial results.
Finally, I'll conclude with some closing remarks before we applied for today.
So with that let's get to our second quarter results.
Q2, net investment income per share was 45 cents on an after tax net investment come up $18.2 million.
The Companys <unk> once again fully covered the dividend during the quarter.
Our GAAP earnings per share was 86 cents, which represents the highest quarterly EPS produced by the company since inception and reflects both the solid net investment income generated during the quarter as well as net gains and our investment portfolio, partly resulting from tightening up overall market credit spreads.
Net asset value per share increased to $15 in 14 cents per share an improvement of 2.9% from the first quarter. We ended the first quarter.
Investments on nonaccrual remain unchanged quarter over quarter and represents just 0.1% at fair value, 0.9% of cost or the total portfolio.
We will these are strong results in any environment, but particularly in light of the challenging economic environment that we operated in during the second quarter.
As we announced after the market goes yesterday, our board declared a 45 cent per share dividend payable to shareholders of record as of September Thirtyth 2020.
This equates to an annualized dividend yield of 11.9% based on that asset after <unk> per share at the end of Q2.
We attribute our strong performance during the quarter core focus on investing in businesses that we believe our durable and less prone to significant impact from economic cycles.
Our largest sector exposures, which includes software health care and I T business I T enabled business services have thus far demonstrated resiliency in this crisis.
For example, our software portfolio companies averaged 18% year over year revenue growth rates in the first quarter of 2020 and preliminary numbers suggested they maintain high single digit to low double digit year over year revenue growth, which even during April and may when lockdowns, where most acute.
Customer retention metrics were also strong which we believe reflects the mission critical nature of the applications.
Our health care portfolio is primarily comprised of businesses engaged in providing outpatient health care services were outsourced hospital services.
These businesses were negatively impacted by the Lockdown orders issued in March that prohibits so called non essential medical services.
In response to our portfolio companies Reforecast their business plans, the remainder of the year with conservative conservative assumptions about the duration of Lockdowns.
And the time would take to return to more normalized demand for medical services.
However, as a second quarter progressed, the lockdowns were lifted sooner than expected in many geographies and customer demand began its way down quicker than most companies forecast in most states businesses, providing them not essential medical services were among the first we are at least from walk down orders in general. This has resulted in patient volumes revenues and liquidity that is better than these couple.
He's had forecast for this stage with recovery.
And I wasn't corporate performance during this remarkable period compared to typical economic cycles, one dynamic that stands out because the extraordinary response from business owners and management teams to quickly and aggressively that business plans in the face of uncertainty.
And the only phases of typical recessionary cycles copies Rockies go to respond as the commencement depth and duration of recessions are difficult to forecast.
In this environment, however, given the obvious devastating impact from global health crisis, and soon Lockdowns copies acted swiftly to just business models and recognition of the challenging operating environment expenses were caught large capital outlays were put on hold and balance sheet focus on liquidity was made a priority.
By and large private equity sponsors and business business owners are acting rationally to ensure the ability for copies to bridge through the other side of this environment.
And our view this decisive and proactive management has been and remains a significant benefit to lenders.
Well, there's certainly a long way to go before the broader economy, which returned to normal and the possibility of additional lockdowns. We're pleased thus far by the efforts undertaken to preserve value in this crisis.
Next I will provide an update our previously announced merger with MLC.
On June 11th we enter to enter into an announced an amended and we screen. We stated agreements and planned merger that was unanimously approved by the board of directors of each company followed recommendations of each company's respect the special committee consisting exclusively other independent directors.
The consideration has been changed from a fixed exchange ratio to a net asset value for net asset value exchange whereby the exchange ratio will be determined that closing so that the MLP troubles with shareholders will receive GSP b shares representing a proportional ownership of the combined company equal to MLC is proportional contribution to the Cubs.
The company is net asset value.
In connection with this amendment GE. Sam has entered has agreed to extend the variable incentive fee cap for additional year through the end of 2021.
As a reminder, the variable incentive fee cap provides that incentive fees payable to GE, Sam will be reduced if net investment income would be less than 40 cents per share without implementation of the incentive fee cap.
She said Im also agreed to reimburse in G.S.P.D. and M.L.C. for all fees expenses incurred a payable by GE SPD or MLC or on their behalf in connection with the trend transaction subject to a cap of $4 million with respect to each of G.S.P.D. and MLC.
This transaction creates a number of significant benefits for shareholders I'd like to reiterate.
First we currently expect the merger to be accretive to GSP. These eni per share in the short and long term.
Second we also expect the transaction built in significant de leveraging for GE, SPD, which creates which creates more capacity to deploy capital interest. These attractive investment environment. What the same time, adding a greater margin of safety to maintain G.S.P.D. is investment grade credit rating and compliance with regulatory and contractual leverage ratio requirements.
[music].
Third the merger is expected to result in overall improvement in GSP these portfolio metrics, including a higher portfolio portfolio yield and a greater single name diversification.
It's also worth noting that MLC only has one investment on nonaccrual status, representing less than 0.1% of the portfolio at fair value and 0.7% at cost.
Finally, the combination more than doubles the size of GE SPD has and is expected to result in benefits of scale, including improved access to diversified funding search sources cost synergies and greater freedom liquidity.
For all these reasons, we're very confident this transaction is in the best interests of shareholders of both companies.
The record date for shareholders eligible to vote on the transaction is August threerd.
On a special shareholder meeting is scheduled to occur on October 2nd.
In the coming days of shareholders will receive proxy materials proxy statements to meet coach every wants to take the time to vote in favor of the merger with that let me turn over to John Yetter. Thanks, Brendan [noise].
The second quarter of 2021 downwardly be remembered for years in decades to come as an extraordinary period during which entire sectors of the global economy shut down on a more or less synchronous basis.
Against this backdrop, we were pleased with our portfolio.
As demonstrated by the strong principal and interest payment performance by our portfolio companies in the face of this adversity.
[music].
In our diversified loan portfolio with a 107 underline portfolio companies loans to just three companies were modified to defer principal and interest payments, representing approximately 2% of the portfolio at both cost and fair value.
In one case, we agreed to defer the second quarter payments until October but the company has already resumed making monthly payments in July as the business and liquidity have rebounded.
In another case, we collected monthly payments in April and May but agreed to defer the June payment in exchange for infusion of equity capital that is junior in light of payment to our loan.
In addition, we executed amendments this quarter that permitted to borrowers to switch from cash to pick interest.
These two investments revpor less represent less than 1% of the investment portfolio at both cost and fair value.
Both of these amendments were executed in connection with new equity or other capital infusions by other investors in the company.
In the majority of cases when negotiating amendments like these we obtain compensation for a green to the amendment, which is typically in the form of a feat and increased interest rate.
For a capital injection or other form of credit support by the owner of the business.
I would note that none of these amendments relate to non sponsored businesses.
While our focus this quarter was primarily on our existing portfolio, we were active across our platform in reviewing new investment opportunities.
Deal volumes were quite low in the early part of the quarter, but we saw steady increase as the quarter progressed.
Terms of new deals are meaningfully better than the pre kobin period in generally includes wider spreads tighter covenants and better call protection.
We will also add that the underwriting process is significantly enhanced.
Now we can review accompanies financial performance over the last few months to actually see how it performs during a recessionary period.
Well, we will continue to be primarily focused on our existing portfolio in the current quarter. Our platform remains highly engaged with middle market sponsors and owners to evaluate opportunities and we're confident that the company will be a beneficiary of the improved investment environment.
So to turn to specifics for the quarter.
During this quarter, we made two new investment commitments, one of which was to a new portfolio company in one way to an existing portfolio company, but both of these were negligible in size.
We received 18.3 million in repayments driven primarily by the full repayment of our second lien investment in discover Oregon, which was renamed Zoom Info and went public in an IPO on June four.
It quickly race to market capitalization of over $18 billion.
This would imply that the loan to value on our secondly investment in the company was approximately 7%.
[noise] last quarter, we spoke about drawdowns on revolving loan commitments that we had made to certain portfolio companies.
This quarter, we experienced net repayments revolving loan commitments, which we think is evidence that liquidity is generally solid across our portfolio companies.
Given the muted originations and repayment activity this quarter our portfolio composition as of June Thirtyth is relatively unchanged quarter over quarter.
Total investments in our portfolio were 1 billion 424.5 million at fair value comprised of 92.7% in senior secured loans, including 78.3% in first lien.
2.4% in first lien last a unit tranche and 14.4% in second lien debt as well as 0.5% an unsecured debt and 6.8% in preferred and common stock.
We also had 60.8 million of unfunded commitments as of June Thirtyth, bringing total investments and commitments to 1 billion 485.3 million.
As of quarter end, we had 107 portfolio companies operating across 38 different industries.
The weighted average yield of our investment portfolio at cost at the end of the second quarter was 7.5% as compared to 7.7% at the end of the first quarter.
The weighted average yield of our total debt and income producing investments at cost was 8.3% at the end of the quarter as compared to 8.5% at the end of Q1.
[noise] the declining yields during the quarter. It was primarily attributable to the decline in LIBOR.
However, the vast majority of our portfolio has a LIBOR floor of 1% or higher.
Therefore, we do not expect significant further headwinds given current LIBOR level.
I'll now turn the call the Jonathan to walk through our financial results.
Thanks, John.
During the quarter, we continued to maintain cash on our balance sheet in excess of our unfunded obligations for the time beer.
As a result, we had 105.8 million of cash and cash equivalents on our balance sheet.
As of the end of Q2 against unfunded investment commitments of approximately 60.8 million.
While we were cognizant that maintaining this excess liquidity has a cost we believe it remains prudent to have excess cash on hand during this extraordinary environment.
We will continue to evaluate the level of this excess liquidity on an ongoing basis and would expect it to decline as the economic environment normalizes.
Turning to our operating results.
Net investment income per share was 45 cents the same as in Q1.
Earnings per share were 86 cents compared to a loss per share of $1.58 in the previous quarter.
Our total investment income for the second quarter was 30.6 million, which was down from 32 million last quarter.
The decrease was primarily driven by a decrease in interest income due to a decline in LIBOR.
We ended with net expenses of 12 million for the quarter as compared to 13.4 million in the prior quarter.
Expenses were down quarter over quarter, primarily reflecting the voluntary fee waiver in the quarter.
During the quarter, our ending net debt to equity was 1.33 times versus 1.4 times at the end of Q1.
We ended Q2 was net asset value per share at $15 in 14 cents as compared to $14.72.
From the prior quarter driven by unrealized appreciation on investments primarily as a result of tightening credit spreads.
The company contingent to have 46.6 million in taxable accumulated undistributed net investment income at quarter end, resulting from net investment income.
That has exceeded our dividend historically.
This equates to $1.15 per share on current shares outstanding.
Consistent with prior years, we spilled over all of the undistributed net investment income into 2020, as we believe the cost of the spillover in the form of the excise tax is a small price to print to pay relative to the much higher cost of issuing new equity to replace that amount.
With that I will turn it back to Brendan.
Jonathan.
In closing, while we're pleased with the company's strong performance during the quarter. We remain highly aware that we're operating in an extraordinary environment and that we are likely closer to the getting than the end of the economic disruption caused by the ongoing pandemic.
We are focused on work with management teams and the financial sponsors and owners where portfolio companies to navigate through this challenging time.
Same time, we're keeping a careful watch for unique opportunities to create value for our shareholders.
We believe that the proposed merger with MLC is just such an opportunity and we encourage our shareholders take the time to vote in favor of the transaction at the earliest convenience.
As always we thank you for the privilege of managing your capital and as always we are open to here a few especially as all of US work. This extraordinary environments with that let's hold up lines for questions.
Ladies and gentlemen, we will now take a moment you can possibly to when the roster.
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And your first question is from the wind is finian O'shea with Wells Fargo Securities. Please go ahead.
Hi, good morning, Thanks for having the on hold everyone's doing well.
I was little late here. So forgive me if that was addressed.
Asking about the the fee waiver.
2.1 2.2 billion.
I thought the.
Waiver was.
Designed to.
Only cap the incentive fee earned.
48.
Is is that this quarter's waiver just an AD hoc or is there a is there are designed to it.
Obviously, if it helps you meet the dividends so maybe that's it but any color there would be helpful.
Yes, it's Brendan I'll, let John Jive chime in if you guys.
Points here as well.
But yes. It this way this was over and above a the contractual or variable incentive fee waiver that we had put in place and the view fan was obviously this pretty extraordinary extraordinary environments and a as a means to further support the up on merger we thought it makes sense. It to continue to support the company a with the incremental fee waiver.
And we think ultimately a that's a benefit to shareholders to support the dividend here and as we look forward to the merger and transaction Oh, we've talked a lot about the incremental benefits.
That's a copy we'll get a we you know Brady bunch of those into in the call here today, including the deleveraging, but Ah, but also very importantly, including the.
Accretion to net investment income on a per share basis, and so again as we sort of approach you're getting the merger over the finish line. We thought it was appropriate to provide incremental supports the company in that regard.
I'm not sure that's helpful and hurt.
I just just to follow their.
You know.
The appreciating all the dividend supporting the waivers now and over time.
Even with this rebound your your dividends about.
4% a book.
Which is probably high even with your very good cost structure, I mean, it's perhaps or in a bold, but at least borderline.
Do you have you know a longer term.
View or are you confident with a certain level of say leverage in spread that you're able to earn the dividend.
Through the merger.
Yeah, I think again fan I think that's that's a the made the main point here as we look forward to the merger getting transaction done.
And the benefits as I've taught that we've got a a big deleveraging they'll take place, which gives incremental asset capacity.
And when you combine the two companies given especially when you look at MLC, a you know a lack of non accruals higher portfolio yields we do continue to to see the dividend supportable, a pro forma for the merger.
Yes in the one thing at the one thing I'd add to that is the the other benefit is running mentioned is the de leveraging and so part of it is obviously, we're in a much better spread environment today than we were pre coated.
So as we think about a pro forma for the merger the ability to deploy capital a fall in our de leveraging into the better spread environment is also incrementally helpful.
So it's more than just the plus b.
It's also they say the incremental that we can do from there.
Okay sure and.
Just a final question.
Appreciating the market outlook commentary.
You know, it's consistent with most of what we heard this quarter.
Can you talk about you're pretty out you've been historically pretty active in the non sponsored channel.
Can you talk about that [noise].
That Avenue is that more open or less open or.
You know kind of developing in a similar way.
You know.
Down the fairway traditional sponsor market.
Yes. Good question I think you know, what we said before and I think is worth repeating here or is the way, we think of our to kind of to.
Pistons within our engine of sourcing one being through our sponsor partners in one through our connections with that business owners in the middle market is that they tend to work somewhat in opposition to each other meaning that when when there. When you. When you are in a period of time when there's a lot of sponsor activity then probably a lot of.
Middle market business owners are looking to monetize their company to take advantage of that strong bid from private equity firms and that means are probably less likely to borrow money on their own to pursue growth initiatives.
When you're an environment, where there is less sponsor activity and frankly valuations, perhaps are not as high as they once were this is the type of environment, where we would expect and historically have seen.
Increasing interest from non sponsored from business owners to to borrow money to grow the business themselves again, rather than monetizing it that's perhaps a a lower enterprise values and the otherwise could get.
So I mean look we're still in the early stages. This I think March April and into May was frankly, just the shock to to the system and I think we didn't see a lot of activity almost anywhere a sponsored or non sponsored but as you know volumes are rebounding and it's certainly our expectation based on past history and that that.
That we'll see more on the non sponsored side in the coming months in quarters, and I'd say no looking at our pipeline today, there is evidenced that that's starting to play out.
Okay. Thanks.
Just one more you you gave your.
I think three modifications.
Is this exclusive of.
You know in material or regular.
Covenant relief slightly less material covenant relief.
Yes, there are like <unk>.
Yeah, no. So what we were focused on the color or the information. We gave in the prepared remarks are what we think are the most important amendments or changes to the existing loan documents and as you may have heard again I'm not sure exactly when you step in the Gulf in but.
We had we had to less than 2% of the portfolio comprised of three names where we.
Granted deferral and wait a couple of names, where we switch from pick to cash, but again that was less than one person on the portfolio. So all in kind of the changes the modification of well call.
Cash or or or a cash payment terms were less than 3% of of the total other total portfolio. So we think fairly small.
In addition to that I mean, there theres in any quarter. There's a lot of what we can consider to be suddenly less material, but what do we care cost probably more as more typical garden variety amendments for this Saturday the other thing and so that there were other things besides that but nothing that we would highlight as as as they say being economically material.
So now I'll say don't I know others have kind of quoted yes, we though as important to bifurcate between payments amendments and be quite specific about that as well as other amendments I know others have quoted.
John alluded to other categories you. Other other modifications that would include yeah waivers of levers comes et cetera. If you take those in total a it was about 6% the portfolio on a fair value basis.
Okay. That's very helpful. Thats all for me thanks, so much.
Excellent.
And your next questions from the line of Robert Dodd with Raymond James. Please go ahead.
Hi, guys.
Sure.
Well.
Oh.
Oh.
On on.
Since it's been switched.
The dividend.
I mean.
When when we look.
Yes.
The way.
Okay.
Releven pockets.
I still.
I have a little bit of a hot Todd coming up to two earning.
That 45 cents.
Yes, that's a.
Rebounding.
Yes.
So is that is.
Oh, maybe taking up leverage.
Oh yeah.
She is going to go down.
Oh.
Yes, if any.
Any other factors that going into that it still seems a bit of yes, again, yeah, Robert I'll I'll take a crack and we're happy to walk through and more to details. We go forward here as well, but John hit on it. If you if you think through the components.
That will contribute to the the and I accretion on a go forward basis here or there is one what are what we described here as you'll give given given the de leveraging there is incremental investing capacity pro forma for that so we wouldn't describe it robbers taking that above any previously announced targets that weve that we've described historically.
We would note and John No. This is well certainly a much better investing environment higher yields higher spreads.
More upfront points more call protection and the like I think also when you look at that this quarter in particular LIBOR being a big big component of the other decrease in net investment income.
And if you look at GE SPD us on Standalone basis.
You are having a much bigger component of fixed costs that unsecured fixed costs that are in our capital structure is a is it is they yeah, we take a bit more beheaded in quarter like this where LIBOR did go down and some of our of our over debt obligations are fixed nature. That's not the dynamic I don't know seeing so that will be a component here as well.
Another category is your monetization of a of currently non income producing assets at a at GE SPD in particular, so a handful of names you know we.
Hundred hundred fence would it would be a good example, non income producing asset in the portfolio today strong performance ability to you know to monetize that and reinvest into income producing assets here.
And so we look at yet again another another dynamic it this quarter in particular complete lack of any other income I think we had at about 300000 this quarter, Robert a have a amendment fee or amortization of discounts and so on a more normalized basis I think that number on a year over year basis was something to me.
$1 a in the in a year ago quarter. So if you take all all those components yeah certainly.
On the front, a pro forma basis supportive of a much higher per share income level.
So I appreciate that.
What does the components.
Hi.
Two questions.
To be.
[noise] vested in rotating.
Obviously, you cannot be deployed high yields and depth.
Since capital, but it takes time for that.
[music].
Yeah.
Why.
Hi.
The deal.
[laughter].
Yes, I'll take a crack and I'm sure John has some thoughts here as well and so again the merger is a big de leveraging there is incremental investment cat capacity well within the capability of the team to quickly take advantage of the current mark Mark opportunity and deploy that capital into the current environment. So we wouldn't see for example, Robert that excess capital taken away.
Long time for us to get deployed and put out into its into this current current market environment.
And so ER. So I don't think we to be a move up the risk spectrum a in order to produce those higher yields. The current environment is quite supportive of that in fact, you can get safer loans lower leverage.
Companies that you've got the ability to observe their performance during during this pandemic and understanding there there there.
The ability to be resilient in this environment to make those loans at higher yields and higher and higher spreads.
And so we think thats all within the capabilities that in terms of how do we underwrite and in this environment.
Obviously, we're all are figuring out how to reengineer workflow processes are in the ordinary course every single copy that we're investing in we're out in meeting the company. We're meeting the management team, we're kicking the tires on a local basis and now we have to do what's what's going to be you know the safest for our team in for for our Counterparties as well. So there's a lot we could do with tech.
Obviously, there is lot that we're able to do with the benefit of our third party.
Advisors as well in certain cases on consulting ports et cetera, so feel quite comfortable or are you investing in this environment. One thing I'd say as well again when you look at the component of our portfolio, where we've been heavily invest into areas like software and health care.
I I suspect you will see other managers, who have seen the resilience of those spaces wanting to break in having been active in those spaces for quite a long time, having to benefit and depth of relationships I think puts us at a at a leg up a as we're winning transactions in those spaces in those sectors that have proven to be bit more resilient.
Yeah, I mean, Robert I I would just had two things just as a quick reminder, here. So the weighted average portfolio yield at GE SPD as Brian mentioned click clearly has declined because of the decline in leibler, Although now were.
Below the floors. So we don't expect to see much much further from here, but but importantly, remember the other sort of leg down we had in the average portfolio yield was when we brought the senior our former senior credit fund onto the balance sheet.
We talked about this and in about a year ago, when when we when we execute that transaction.
And our plan continues to be that those were largely lower yielding kind of upper middle market loans that were probably not we were not squarely in our core direct origination strategy.
And so as once you brought those on the balance sheet. Our plan has long been that as those loans get repaid or mature, we otherwise find ways to monetize them that we'd be able to redeploy that capital into higher spread into a higher spread environment and that continues to be the plan and so you know I think I think it's not a change at all in kind of what we've historically done with.
In the balance sheet of GSV, but it is more taking these assets that we brought on the balance sheet and putting turning them into what we've historically done.
The second the second point that I would make is I think one of the real advantages that that frankly public bdcs have including our BDC.
Is that all and especially on our public BDC is that.
You know we've locked in a spread in a financing cost for the next five years, whereas people who are trying to raise new financing facilities to pursue private credit strategies today are no doubt going to pay a much higher spread than they would have free Kelvin.
You know our revolver as he is you probably know.
Has a maturity in 2025.
It's live or 187 in half.
Which is a really attractive spread you know I I promise you. If you are a private credit manager and you're going to and you're raising a new fund today and trying to get financing, you're not going get anywhere near that level spread.
So that's a real benefit and just reduces the cost of capital of our BDC relative to others. That's important because it means that the overall spread environment is likely for new loans is likely to stay a bit higher as you know these these managers who have other private credit vehicles that don't have that haven't lock in that low spread.
On their liabilities and instead or our borrowing a much higher rates, they're gonna have to come in higher spreads on their assets in order to meet their target returns. So so we think that probably gives the you know the public bdcs, including ours, a pretty distinct advantage in this environment.
I'm in the last thing it would add just regarding underwriting I think Brendan hit on all the practical realities of underwriting this environment, but I mentioned something in my prepared remarks that I want to amplify here and that is.
For for the frankly, the easiest time I would say to underwrite alone.
Is when you're in a recessionary period or you just go onto a recessionary period. So you can see exactly how a company performs in that kind of very very no pressure tested environment. We've gone 10 years, a decade without having any recessions in this country and.
There's been a long time since anybody really knew how these different companies, we're going to perform through a recessionary period now we've got all this very fresh an incredibly fresh evidence of what happens and I think that allows us.
Yes, who are who are where part lenders were not distressed folks trying to.
I try to trying to trying to take take advantage of economic stress rather we're just looking for high quality companies that we think our rescission recession resistant and durable and having this real fresh data set I think just augments our underwriting capabilities.
If I can one one.
Question on they see I mean.
No recession.
Hello.
Yes.
This time depending on.
The vertical.
But.
Right.
Yes.
Opticians dentist.
No because we're going.
So does that.
This recession, because it does not seem to be normal.
The impact.
Is that has.
With that.
Hey.
So normal session for that.
No no for sure it's a fair points in Europe, So you're right. There. There's certainly some some things that are unusual about this recession I think you put your finger on what I would say is the most important one.
Which is the impact has had on health care, meaning as you said normally you wouldn't expect to see a lot of cyclicality in health care business, but here just given the nature of this out of the other the catalyst for this recession. This is obviously been affected differently than it normally would but if you set that aside Robert at the end of the day most of the impact of.
Of this recession is just a recession that has a different catalyst in a typical recession you would expect to see companies that are linked to retail or travel and leisure or real estate to be to be more cyclical and more impacted oil and gas again more impacted that is that is not unusual.
And so sure there are some some contributing dynamics around around peoples.
There have been in crowds and in public places that are a little different this time, but the but the end result of that demand destruction is playing through in a in weigh in and I guess than in a way that wouldn't be that dissimilar to a regular irregular recession. So.
Not you point as well taken its not that there is no it using idiosyncrasies that to this recession, but I think overall.
What's your what's your simply scene is is demand destruction that is.
Not that dissimilar to what you'd see in other pro other sort of deeper sessions.
I really appreciate.
At this time there are no further questions. Please continue any closing remarks.
Great. Thank you Das and thank you all for joining us on the call as always if you have any additional questions. Please feel free to reach out to the team and I Hope you have a great week. Thank you very much.
Ladies and gentlemen, this does conclude the Goldman Sachs BDC. He could second quarter 2020 earnings conference call. Thank you for your participation you may now disconnect.