Good day. My name is Jay and I will be your conference operator for today. At this time, I would like to welcome everyone to Delek’s Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. It is now my pleasure to turn today’s program over to Mr. Keith Johnson. Sir, the floor is yours.

Thanks Jay. Good morning. I would like to thank everyone for joining us on this webcast to discuss DKL's second quarter 2019 financial results. Joining me on today's call will be Uzi Yemin, our General Partners' Chairman and CEO; Assaf Ginzburg, CFO; Blake Fernandez, SVP of Investor Relations, as well as other members of our management team. As a reminder, this conference call may contain Forward-Looking Statements as that term is defined under Federal Securities Laws. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believe, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release. As a result, actual operations or results may differ materially from results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. In addition to reporting financial results in accordance with Generally Accepted Accounting Principles, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP measures, which can be found in the press release, which is posted on the Investor Relations section of our website. On today's call, Assi will begin with a financial overview and Blake will review results then Uzi will offer a few closing strategic remarks. With that, I will turn the call over to Assi.

Thank you. Our second quarter performance benefited from contribution from our Red River acquisition competed in May and improved results from our Paline Pipeline. Our DCF was approximately $31.2 million in the second quarter of 2019, compared to $33.5 million in the second quarter of 2018. Our DCF coverage was 1.08 times for the second quarter of 2019, compared to 1.34 times in the prior year period. EBITDA was $45 million, which is similar to the prior year period. Based on our performance, we increased our quarterly distribution to $0.85 per limited partner units for the second quarter ended June 30, 2019. This distribution will be paid on August 13, 2019 and is a 3.7% increase from our first quarter 2019 distribution per unit. This is our 26th consecutive quarterly increases, and is 10.4% higher than our second quarter 2018 distribution per unit. As of June 30, 2019 DKL had approximately $253 million of available capacity on our $850 million credit facility. Our total debt was approximately $841 million and the total leverage ratio 4.6 times is within the 5.25 times currently allowable under our credit facility. Now, I will turn the call over to Blake to discuss the results.

Thanks, Assi. For the second quarter of 2019 Delek Logistics reported net income attributable to all partners $24.9 million, which compares to $25.6 million in the prior year period. Interest in net income was $16.8 million or $0.69 per unit compared to $19.4 million or $0.79 per unit in the prior year period. I do want to note, lower throughput on our assets which was related to the turnaround with El Dorado refinery reduced our performance in the second quarter of 2019 by approximately $800,000 on a year-over-year basis. In our Pipelines and Transportation segment, the second quarter of 2019 contribution margin was $24.1 million, compared to $22.6 million in the second quarter of 2018. This increase was primarily attributable to improved performance from the Paline Pipeline, which was partially offset by lower throughput of the Lion Oil Pipeline System due to reduced operating rates at El Dorado. The Paline Pipeline benefited from a higher tariff after the incentive rate expired at the end of February of 2019. Operating expenses increased to $12.7 million in the second quarter from $9.9 million in the prior year period primarily due to outside services and employee expenses. The Wholesale Marketing and Terminalling segment, the contribution margin was $20 million in second quarter of this year, which was a decrease of $22.7 million in the prior year period. This decrease was due to lower West Texas gross margin partially offset by lower operating expenses. Our West Texas wholesale gross margin was $6.25 a barrel in the second quarter of 2019 compared to $8.06 a barrel in the second quarter of prior year. Throughput in the West Texas was 11,404 barrels per day compared to 12,261 barrels per day in the prior year. During July, the gross margin in West Texas averaged $7.80 per barrel and volumes averaged approximately 9,300 barrels per day. During the second quarter of 2019, our equity income from joint venture crude oil pipelines was approximately $4.5 million compared to income of $1.9 million in the prior year period. The capital expenditures were approximately $1.3 million in second quarter of 2019 included 222,000 of discretionary spending and $1.1 million of maintenance. During the second quarter of 2019, approximately 684,000 was reimbursed by Delek U.S. In the second quarter of 2018, total capital expenditures were $2.3 million. For full-years of 2019, our gross capital expenditure forecast is $8.8 million, which includes $800,000 of discretionary and $8 million of maintenance capital before reimbursement by Delek U.S. We expect approximately $2.3 million of maintenance capital expenditures to be reimbursed in 2019. With that, I will turn the call over to Uzi for his closing comments.

Thanks, Blake and welcome to the team. The Red River transaction provided an immediate contribution to DKL, with two months of ownership in the quarter and is running at the high-end of our forecast. The asset is performing well and we expect increased contributions upon completion of the expansion in the first half of next year. With Red River in the portfolio, it provides the next step in our growth. This potentially allows drop down from DK to be deferred for the time being. Our focus is using our cash flow for organic growth opportunities, deleveraging the balance sheet and supporting our coverage. As DKL continues to grow, we will evaluate option to simplify the IDRs. With continued growth of DKL, this should support annual distribution growth per limited partner unit of at least 10% to 2019, while maintaining appropriate annual distribution coverage. With that, Jay, could you please open the call for questions?

Certainly sir. [Operator Instructions] Our first question comes from the line of Spiro Dounis of Credit Suisse. Your line is open.

Hey, good morning, gentlemen. Uzi, maybe if we just start off on those last comments there around differing drop down potentially in assessing IDRs. I think the guidance provided maybe earlier in the year was to expect something in second half specifically around both of those events. But don't want to read too much into your comments, but it sounds like maybe that has been updated now. And we shouldn't really be expecting here in the second half of the year. Is that fair?

Good morning, and thank you for the question. This is Assaf. Right now as you saw, we have done a very good job with completing the Red River transaction, which would enable us for this year and next year to report very good results and achieve a very high coverage. At this point, doing the drop down - that is actually potentially negatives the coverage and the same thing with the IDR simplification. So what we decided to do at this point is to build coverage and reduce leverage, while investing in project that basically creates a lot of EBITDA, that we are discussing today. And then overtime, we will assess the need to do the IDR simplification, but we definitely want to address it at one point.

Got it. That is clear. I appreciate the color there. Second one just around Wink to Webster and thinking about the potential read throughs for DKL eventually. Just on the 15% return, can you maybe provide a little bit more color around how you are achieving that. Is that sort of on a levered basis, I think 75% LTV was mentioned. And then secondly, just ahead of any potential drop down in the asset later on, should we expect an uplift on the gathering system that you guys are now upstream of that pipeline?

These are great questions and we can be clear on all of them. First as DKL reported today, DK continues to increase the amount of dedicated acreage that the Company has. Obviously that comes from substantial amounts of EBITDA. As the system matures and more and more barrels are coming to the system, there is a need for us to push these barrels outside of system, because we have more barrels than there are refining system. That made the decision for DK to join the Wink to Webster project. We mentioned that we are well above our 15% threshold. The 15% is our leverage. We always said that we are targeting five to seven times EBITDA unleveraged. And we feel that this is a very good project. Also, there is another undisclosed partner in this partnership when they decide to disclose themselves the numbers will be even clearer. So we feel good about that situation. DK mentioned the 75% or at least 75% leveraging that is either through project finance or our other means and we will look into that all this will find itself eventually into the logistics arm. So we feel really good about our ability to get to the $375 million to $395 million EBITDA by 2023.

Great. That is a really helpful color. Thanks everyone and Blake congrats.

Thanks.

Thank you. Our next question comes from the line of Justin Jenkins of Raymond James. Your line is open.

Thanks. Good morning everyone. Uzi, I guess on the topic here of organic growth. It seems like that is the emphasis here and we are going to get some of that from Red River expansion. But maybe can you expand on the potential for growth related to Paline Pipeline and if that can be further expanded?

Absolutely, that is a great question. We are still evaluating that, but with the Red River coming down and more barrel finding themselves into Longview. We spoke about Longview for a long time. One of the reasons we say to ourselves that our growth can come from organic project is the Paline expansion. We are still doing the engineering, but it look like a very good return for our Company. And don't be surprised if we announced something in the next couple of months about Paline in particular and also around Longview in general.

Got it. Thanks, Uzi and follow-up question is more on the IDRs and the targets here in terms of leverage. Actually is there any kind of numbers that you can put out there for us in terms of what you are looking for coverage ratio or leverage target before you start to address some of the longer term concerns?

Sure. So form a leverage perspective, we are always comfortable around four. And we always said for a great acquisition, we are ready to leverage up a little bit. And this is exactly what we did with the Red River. As you know, we leveraged up to 4.65 times. With that being said, after the end of the construction and we think that this pipeline eventually will be full. This would enable us very quickly to go below 4.25 times. On the coverage perspective, as you all know, the decision to make the IDR simplification is a negotiation between DK and DKL. And we want to make sure that this would be fair for everybody. In order to do that, we probably will need to get to a coverage of 1.2 times that would allow us to really quickly do the IDR simplification and to continue and preserve our coverage. So this is basically our goal to get over the next year and a half.

Got it. Thanks everyone.

Welcome.

[Operator Instructions] Our next question comes from the line of Ned Baramov of Wells Fargo.

Good morning. Thanks for taking the question. A follow-up on Paline if I may. So will the planned expansion be timed to match the in service of the expansion of Red River?

The time to do the Paline project is over the next two to three quarters, maybe four quarters. So it may match, we just need to evaluate the assets and generally we would like to come with numbers before we announce that project. We are doing the engineering as we speak and I wouldn't be surprised if it would be all to - if everything will come together at the same time.

Got you. And then question on the West Texas margins, it seems there was another strong quarter with $6.25 per barrel, versus what I think we have discussed in the past in terms of the normalized level in the range of $1.50 to $2.50, could you maybe talk about DKL’s ability to maintain these higher margins going forward?

Well $2.50 is, I don't thing ever was much in the card with the value the way they are, because just shipping from the goals, today on Magellan is $0.085 to $0.09. So this is without terminalling on anything like that. So if you take that just the floor is $3.50 or $4. Now, obviously the market is very strong, we see a tremendous amount of drilling. So, I think Blake mentioned that in July we saw $7.80. So for the rest of the year, we - unless something - drilling will fall off the cliff. We should continue to see good margins.

That is helpful. Thanks that is all I had.

Thanks Ned.

[Operator Instructions] There are no further question at this time. Presenters, you may proceed.

Thanks, Jay. Well, I would like to thank everybody around the table. Specifically, I would like to welcome again, Blake, great addition to the team. I would like to thank my colleagues around the table and to the Management team for the hard work they are putting together. I would like to thank the Board of Directors for the trust they put in us. Obviously, you investors for all these years, and mainly I would like to thank each one of the employees of this great Company who make this Company what it is. Have a great day, we will talk to you in the future.

Thank you again for joining us today. This concludes today's conference call. You may now disconnect. Have a great day.