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Good morning. This is Dennis, and I will be your conference facilitator today. I would like to welcome everyone to the Goldman Sachs BDC, Inc. Second Quarter 2020 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 line for questions.
Before we begin today's call, I would like 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 Company's actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements as a result of a number of factors, including those described from time-to-time in the Company's SEC filings.
This audiocast is copyrighted material of Goldman Sachs BDC, Inc. and may not be duplicated, reproduced or rebroadcast without our consent.
Yesterday, after the market closed, the Company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the homepage of our website at www.goldmansachsbdc.com under the Investor Resources section. These documents should be reviewed in conjunction with the Company's Form 10-Q filed yesterday with the SEC. This conference call is being recorded today, Tuesday, August 11, 2020, for replay purposes.
I'll now turn the call over to Brendan McGovern, Chief Executive Officer of Goldman Sachs BDC.
Thank you, Dennis. Good morning, everyone, and thank you for joining us for our second quarter earnings conference call. I'm joined on the call today by Jon Yoder, 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 on our proposed merger with our affiliated business development company, Goldman Sachs Middle Market Lending Corp, which we refer to as MMLC. Jon Yoder we'll will then discuss our portfolio in more detail with respect to the current environment before turning it over to Jonathan Lamm to walk through our financial results. Finally, I'll conclude with some closing remarks before we open line for Q&A.
So with that, let's get to our second quarter results.
Q2 net investment income per share was $0.45 on after tax net investment income of $18.2 million. The Company’s NII once again fully covered the dividend during the quarter. Our GAAP earnings per share was $0.86, 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 in our investment portfolio, partly resulting from tightening of overall market credit spreads. Net asset value per share increased to $15.14 per share, an improvement of 2.9% from the end of the first quarter. Investments on non-accrual remained unchanged quarter-over-quarter and represented 0.1% at fair value and 0.9% at cost of the total portfolio.
We believe 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 closed yesterday, our Board declared a $0.45 per share dividend, payable to shareholders of record as of September 30, 2020. This equates to an annualized dividend yield of 11.9%, based on net asset value per share at the end of Q2. We attribute our strong performance during the quarter to our focus on investing in businesses that we believe are durable and less prone to significant impact from economic cycles. Our largest sector exposures, which include software, healthcare and IT enabled business services have thus far demonstrated resilience 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 suggest that they maintained high single digit to low double digit year-over-year revenue growth rates even during April and May when lockdowns were most of you.
Customer retention metrics were also strong, which we believe reflects the mission critical nature of the applications. Our healthcare portfolio is primarily comprised of businesses engaged in providing outpatient healthcare services or outsourced hospital services. These businesses were negatively impacted by lockdown where it’s issued in March that prohibited so-called non-essential medical services. In response, our portfolio companies reforecast their business plans for remainder of the year with conservative assumptions about the duration of lockdowns and the time it will take to return to more normalized demand for medical services. However, as the second quarter progressed, the lockdowns were lifted sooner than expected in many geographies and customer demand began to rebound quicker than most companies forecast. In most cases, businesses providing non-essential medical services were among the first in the recent lockdown orders. In general, this has resulted in patient volumes, revenues and liquidity that is better than these companies had forecasts for this stage of recovery.
In analyzing corporate performance during this remarkable period compared to typical economic cycles, one dynamic that stands out is the extraordinary response from business owners and management teams to quickly and aggressively adapt business plans in the face of uncertainty. In the early phases of typical recessionary cycles, companies are often slow to respond as the commencement, depth and duration of recessions are difficult to forecast. In this environment, however, given the obvious devastating impacts from global health crisis and ensuing lockdowns, companies acted swiftly to adjust business models in recognition of challenging operating environment. Expenses were cut, large capital outlays were put on hold, and balance sheet focus on liquidity was main priority. By and large, private equity sponsors and business owners were acting rationally to ensure the ability for companies to grow through the other side of this environment. In our view, this decisive and proactive management has been and remains a significant benefit for lenders. While there is certainly a long way to go before the broader economy returns to normal and the possibility of additional lockdowns, we're pleased thus far by the efforts undertaken to reserve value in this crisis.
Next, I want to provide an update on our previously announced merger with MMLC. On June 11th, we entered into and announced an amended and restated agreement and plan of merger that was unanimously approved by the Board of Directors of this company, following the recommendations of each company’s special committee consisting exclusively of their 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 at closing so that the MMLC shareholders will receive GSBD shares, representing a proportional ownership of the combined company equal to MMLC's proportional contributions to the combined company’s net asset value.
In connection with this amendment, GSAM has entered -- has agreed to extend the variable incentive fee cap for an additional year through the end of 2021. As a reminder, the variable effective fee cap provides that incentive fees payable to GSAM will be reduced if net investment income will be less than $0.48 per share without implementation of the incentive fee cap. GSAM also agreed to reimburse GSBD and MMLC for all fees and expenses incurred and payable by GSBD or MMLC or on their behalf in connection with the transaction, subject to a cap of $4 million with respect to each of GSBD and MMLC.
This transaction creates a number of significant benefits for shareholders that I'd like to reiterate: First, we currently expect the merger to be accretive to GSBD's NII per share in the short and long-term. Second, we also expect the transaction to result in significant deleveraging for GSBD, which creates more capacity to deploy capital into today’s attractive investment environment, while at the same time adding a greater margin of safety to maintain GSBD's investment grade credit rating and compliance with regulatory and contractual leverage ratio requirements. Third, the merger is expected to result in overall improvement in GSBD's portfolio metrics, including a higher portfolio yield and a greater single-name diversification. It is also worth noting that MMLC only has one investment on non-accrual status, representing less than 0.1% of portfolio at fair value and 0.7% at cost. Finally, the combination more than doubles the size of GSBD and is expected to result in benefits of scale including improved access to diversified funding sources, cost synergies and greater trading liquidity. For all these reasons, we are very confident that this transaction is in the best interest of shareholders of both companies. The record date for shareholders eligible to vote on this transaction is August 3rd and a Special Shareholder Meeting is scheduled to occur on October 2nd. In the coming days, shareholders will receive proxy materials -- proxy statements. So, we encourage everyone should take the time to vote in favor of the merger.
With that, let me turn it over to Jon Yoder.
Thanks, Brendan.
Second quarter of 2020 will undoubtedly be remembered for years and 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.
In our diversified loan portfolio with 107 underlying 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 right of payment to our loan.
In addition, we executed amendments this quarter that permitted two borrowers to switch from cash to take interest. These two investments 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 companies. In the majority of cases, when negotiating amendments like these, we obtained compensation for agreeing to the amendment, which is typically in the form of a fee, an increased interest rate or 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 a steady increase as the quarter progressed. Terms of new deals are meaningfully better than the pre-COVID period and generally include wider spreads, tighter covenants and better call protection. I'd also add that the underwriting process is significantly enhanced because now we can review a company's financial performance over the last few months to actually see how it performs during a recessionary period. While 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 are 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 and one was 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 DiscoverOrg, which was ZoomInfo and went public I an IPO on June 4th. It quickly raised to a market capitalization of over $18 billion. This would imply that the loan-to-value on our second lien investment in the company was approximately 7%.
Last quarter, we spoke about drawdowns on revolving loan commitments that we’ve made to certain portfolio companies. This quarter, we experienced net repayments of 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 30th is relatively unchanged quarter-over-quarter. Total investments in our portfolio were $1,424.5 million at fair value, comprised of 92.7% in senior secured loans, including 78.3% in first lien, 2.4% in first lien/last-out unitranche launch and 14.4% in second lien debt, as well as 0.5% unsecured debt and 6.8% in preferred and common stock. We also had $60.8 million of unfunded commitments as of June 30th, bringing total investments and commitments to $1,485.3 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 on our total debt and income producing investment at cost was 8.3% at the end of the quarter, as compared to 8.5% at the end of Q1. The decline in yields during the quarter 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 levels.
I'll now turn the call to Jonathan to walk through our financial results.
Thanks, Jon.
During the quarter, we continued to maintain cash on our balance sheet in excess of our unfunded obligations for the time being. 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 are 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. Our net investment income per share was $0.45, the same as in Q1. Earnings per share were $0.86, compared to a loss per share of a $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 with net asset value per share at $15.14 as compared to $14.72 from the prior quarter, driven by unrealized depreciation on investments, primarily as a result of tightening credit spreads. The Company continued 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 a $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 pay relative to the much higher cost of issuing new equity to replace that amount.
With that, I will turn it back to Brendan.
Thanks, 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 excluding environment and that we’re likely closer to the beginning 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 of our portfolio companies to navigate through this challenging time. At the same time, we are keeping a careful watch for unique opportunities to create value for our shareholders. We believe that the proposed merger with MMLC is just such an opportunity and we encourage our shareholders to take the time to vote in favor of the transaction at your earliest convenience. As always, we thank you for the privilege of managing our capital. And as always, we’re open to hearing from you, especially as all of us worth through this extraordinary environment.
With that let’s open up the line for questions.
[Operator Instructions] And the first question from the line of Finian O'Shea with Wells Fargo Securities. Please go ahead.
Hi. Good morning. Thanks for having me on. I hope everyone's doing well. I was a little late here. So, forgive me if this is addressed. Asking about the fee waiver of $2.1 million -- $2.2 million. I thought the waiver was designed to only cap the incentive fee to earn 48. [Ph] Is this quarter’s waiver just an ad hoc or is there a design to it? Obviously, it helps you meet the dividend. So, maybe that’s it. But, any color there would be helpful.
Yes, Finian. It’s Brendan. I'll let Jon chime in if he has points here as well. But yes, this was over and above the contractual variable incentive fee waiver that we had put in place. And the view then was obviously this pretty extraordinary environment. And as a means to further support the outstanding merger, we thought it makes sense to continue to support companies with the incremental fee waiver. And we think ultimately, that's a benefit to shareholders to support the dividend here. And as we look forward to the merger and transaction, we talked a lot about the incremental benefits that the Company will get. We enumerated a bunch of those in the call here today, including the deleveraging, but also very importantly including the accretion to net investment income on a per share basis. And so, again, as we sort of approach getting the merger over the finish line, we thought it was appropriate to drive incremental support to company in that regard.
Sure. That's helpful. And just to follow there, appreciating all the dividend support and the waivers now and over time. Even with this rebound, your dividend is about 12% a book, which is probably high, even with your very good cost structure. I mean, it's perhaps earnable, but at least borderline. Do you have a longer term view? Are you confident with a certain level of say leverage and spread that you're able to earn the dividend through the merger?
Yes. I think, I that's the main point here. As we look forward to the merger again transaction done and benefits, the fact that we've got a big deleveraging that will take place with incremental asset capacity. And when you combine two companies, given especially when you look at MMLC, a lack of non-accruals, higher portfolio yields, we do continue to see the dividend as affordable pro forma for the merger.
And let me add to that is the other benefit as Brendan mentioned is the deleveraging. And so, part of it is, obviously, we're in a much better spread environment today than we were pre-COVID. So, as we think about pro forma of the merger, the ability to deploy capital following our deleveraging into the better spread environment is also incredibly helpful. So, it's more than just the A plus B, it's also let's say the incremental that we can do from there.
Okay, sure. And just a final question. I'm appreciating the market outlook commentary, consistent with most of what we heard this quarter. Can you talk about -- you’ve been historically pretty active in the non-sponsored channel. Can you talk about that avenue? Is that more open or less open or kind of developing in a similar way to the -- down the fairway traditional sponsor market?
Yes. So, a good question. I think, what we said before and I think it's worth repeating here is the way we think of our two -- our kind of two pistons within our engine of sourcing, one being through our sponsor partners and one through our connections with business owners in the middle market, is that they tend to work somewhat in opposition to each other, meaning that -- when you're in a period of time, when there is a lot of sponsor activity, then probably a lot of middle market business owners are looking to monetize their companies to take advantage of that strong bid from private equity firms. And that means they're probably less likely to borrow money on their own to pursue growth initiatives. When you're in 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 borrow money to grow the business themselves, again rather than monetizing it as perhaps a lower enterprise value than you otherwise could get.
So, I mean, look, we're still in the early stages. I think, March, April and into May was frankly just a shock to the system. And I think we didn't see a lot of activity almost anywhere, sponsored and non-sponsored. But, as volumes are rebounding, it is certainly our expectation, based on past history and that we'll see more on the non-sponsored side in the coming months and quarters. And I'd say, looking at our pipeline today, there's evidence that that's starting to play out.
Okay. Thanks. And just one more, you gave your I think 3 modifications. Is this exclusive of immaterial or regular covenant release, less material covenant release…
Yes. So, what we're 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 stepped in the call, Finian, but, we had 2% -- less than 2% of portfolio comprised of three names where we granted the deferral and we had a couple of names where we switched from -- to cash. But again that was less than 1% of the portfolio. So, all-in, kind of the change is the modification of what I'll call cash or cash payment terms were less than 3% of the total portfolio. So, we think fairly small. In addition to that, in any quarter, there's a lot of what we would consider to be certainly less material, but what we care about is really more is, more typical garden variety amendments for this side -- the other thing. And so there were other things besides that, but nothing that we would highlight as specially anything economically material.
And Finian, I'd say -- and I know others have kind of quoted, we know it’s important to mark it between payments amendments. So, we are quite specific about that, as well other amendments, I know others have quoted. Jon alluded your other categories, other modifications that would include waivers of [indiscernible] you take those in total, it was about 6% of the portfolio on a fair value basis.
[Operator Instructions] And your next question’s from the line of Robert Dodd with Raymond James. Please go ahead.
[Technical Difficulty] Following up to Tim’s question. On the dividend relative to NAV, I mean, when we look at – [Technical Difficulty] after the waiver, structural contractual waivers inspired, we [Technical Difficulty] a little bit, spreads are a little wider today. I still have a little bit of a hard time coming up to earning that $0.45 dividend unless there’s a further rebound in your investible assets. So, is there any clarification on maybe taking up leverage even further, beyond -- obviously it's going to go down on MMLC, but are there any other factors that are going into that? Because it still seems a bit [Technical Difficulty]
Yes. Robert, I'll take a crack and we’re happy to walk you through in more detail as we go forward here as well. But Jon hit on -- if you think through the components that will contribute to the NII accretion on a go forward basis here, there's one what we described here as -- given the deleveraging there is incremental investing capacity pro forma for that. So, we wouldn't describe it Robert above any previously announced target that we've described historically. We would know, and Jonathan knows this as 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 this quarter, particularly LIBOR being a big, big component of the decrease in that investment income. And if you look at GSBD on a standalone basis, having a much bigger component of fixed costs debt, unsecured fixed cost debt in our capital structure, is a -- we take a bit more of a hit in a quarter like this where LIBOR did go down and some of our debt obligations are fixed in nature. That’s not the dynamic at MMLC. So that will be a component here as well. Another category is monetization of currently non-income producing assets at GSBD in particular. So, a handful of names, Hunter Defense would be a good example, non-income producing asset in the portfolio today, strong performance, ability to monetize that and reinvest in income producing assets here. And so, we -- again, another dynamic this quarter in particular, complete lack of any other income. I think we had about 300,000 this quarter, Robert, of a amendment fee or amortization of discount. And so, on a more normalized basis, I think that number on a year-over-year basis looks something like $2 million in the year ago quarter. So, if you take all of those components, certainly, on a pro forma basis supportive of a much higher per share income level?
So, I appreciate that. So I mean, one of the components of that obviously is supporting [Technical Difficulty]. So, two questions here. Are you going to be [Technical Difficulty] in this environment?
Yes. I'll take a crack on that. I'm sure Jon has some thoughts here as well. So again, the merger is deleveraging, there is incremental investment capacity, well within the capability of the team to quickly take advantage of the current market opportunity and deploy that capital into current environment. So, you wouldn't see for example, Robert, that excess capital taking a long time for us to get deployed and put out into this current market environment. And so, I don't think we would up the risk spectrum, in order to produce those higher yields in current environment is quite supportive of that. In fact, you can get safer loans, lower leverage companies that got the ability to observe their performance during this pandemic and understanding their ability to resilience in this environment and make those loans at higher yields and higher spreads. And so, we think that's all in the capabilities.
In terms of how we underwrite in this environment, obviously, we're all figuring out how to reengineer workflow processes, or in the ordinary course. Every single company that we're investigating in, we're out meeting the company, we're meeting the management team, working on a local basis. And now, we have to do what's going to be the safest for our team and for our counterparties as well. So, there's a lot we could do with technology. There's a lot that we're able to do with the benefit of our third party advisors as well, in certain cases, our consultant of course, et cetera. So, we feel quite comfortable 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 invested in areas like software and healthcare, I suspect you'll see other managers who have seen resilience on those bases wanting to break in. Having been active in those spaces for quite a long time, having the benefit and depth of relationships I think puts us at a leg up as we're winning transactions in those spaces and those sectors that have proven to be a bit more resilient.
Yes. I mean, Robert, I would just add two things. And just as a quick reminder here, so the weighted average portfolio yield at GSBD, as Brendan mentioned, clearly has declined because of the decline in LIBOR. Although now, we're below the floor, so we don't expect to see much further from here. 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 on to the balance sheet. We talked about this -- about a year ago when we executed that transaction. And our plan continues to be that -- those were largely lower yielding kind of upper middle market loans that were probably not -- were not focus in our core direct origination strategy. And so, as -- once we brought those on the balance sheet, our plan has long been -- 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, I think it's not a change at all in kind of what we've historically done with -- the balance sheet of GSBD, but it's more taking these assets that we brought on the balance sheet and putting -- turning them into what we’ve historically done.
The second point that I would make is I think one of the real advantages that frankly public BDCs have including our BDC is that -- especially our public BDC is that, we've locked in 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 pre-COVID. Our revolver, as you probably know, has a maturity in 2025. It's LIBOR of 187.5, which is a really attractive spread. 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 to get anywhere near that level of 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 likely to stay a bit higher as these managers who have other private credit vehicles that haven't locked in that low spread on their liabilities and instead are borrowing at much higher rates, they're going to have to command higher spreads on their assets in order to meet their target returns. So, we think that probably gives the public BDCs, including ours a pretty distinct advantage in this environment.
The last thing I would add just regarding, underwriting. I think Brendan hit on all the practical realities of underwriting in this environment. But I mentioned something in my prepared remarks that I said I want to amplify here and that is for -- frankly the easiest time, I would say to underwrite a loan is when you're in a recessionary period, just gone through a recessionary period, you can see exactly how a company performs in that kind of very, very pressure tested environment. We've gone 10 years, a decade without having any recessions in this country. And it's been a long time since anybody really knew how these different companies were going to perform through a recessionary period. Now, we've got all this very fresh, incredibly fresh evidence of what happened, and I think that allows us who are -- our lenders were not distressed folks trying to take advantage of economic stress, rather we're just looking for high-quality companies that we think are recession resistant and durable. And having this real fresh data set, I think just augments our underwriting capabilities.
If I can, one follow-on question is that obviously -- I mean, if we look at recession, healthcare is quite resilient. This time, depending on the very different healthcare environment [Technical Difficulty] not resilient because [Technical Difficulty] So, does this [Technical Difficulty] from this recession because it does not seem to be normal in terms of the impact of [Technical Difficulty] is that as crucial as you would [Technical Difficulty] efforts around normal recession?
No, for sure. It's a fair point and you’re obviously right. There are certainly 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 it's had on healthcare. Meaning, as you said, normal, you wouldn't expect to see a lot of cyclicality in healthcare business. But here just given the nature of this -- the catalyst of this recession, it's 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 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 more cyclical and more impacted. Oil and gas again more impacted. That is not unusual. And sure, there are some ensuing dynamics around people’s fear of being in crowds and in public places that are a little different this time. But the end result of that demand disruption is playing through in way -- I guess in a way that wouldn't be that dissimilar to a regular recession. So, your point is well taken. It's not that there is no idiosyncrasies to this recession. But, I think overall, what you’re simply seeing is demand disruption that is not that dissimilar to what you can see in other sort of deeper recessions.
At this time, there are no further questions. Please continue with any closing remarks.
Great. Thank you, Dennis. And thank you all for joining us on the call. As always, if you have any additional questions, please feel free to reach out the team. And I hope you have a great week. Thank you very much.
Ladies and gentlemen, this does conclude the Goldman Sachs BDC, Inc. second quarter 2020 earnings conference call. Thank you for your participation. You may now disconnect.