Good morning, and welcome to the Delek Logistics Second Quarter 2020 Earnings Conference Call. [Operator Instructions] After today’s presentation, there will be an opportunity to ask question. Please note this event is being recorded. I would now like to turn the conference over to Blake Fernandez. Please go ahead.

Thank you and good morning. I would like to thank everyone for joining us on this webcast to discuss Delek Logistics Partners' second quarter 2020 financial results. Joining me on today's call will be Uzi Yemin, our General Partners Chairman and CEO; and Reuven Spiegel, CFO; 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. In addition to reporting financial results in accordance with Generally Accepted Accounting Principles or GAAP, we report certain non-GAAP financial results. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which can be found in the press release, which is posted on the Investor Relations section of our website. Our prepared remarks are being made assuming the earnings release has been reviewed and we are covering less segment and market information that is incorporated into the second quarter press release. On today's call, Reuven will begin with financial overview, I will review the results, and Uzi will offer a few closing strategic remarks. With that I'll turn the call over to Reuven.

Thank you, Blake. Our second quarter performance on a year-over-year basis benefited from relatively stable baseline business operations, contribution from the recent asset drop-downs along with business initiatives and asset optimization. Our distributable cash flow was approximately $57 million in the second quarter of 2020, compared to $31 million in the second quarter of 2019. The Limited Partners' interest in net income increased approximately 107% over the year -- over the prior year period. Our DCF coverage ratio was 1.58 times for the second quarter of 2020 compared to 1.08 times in the prior year period. EBITDA was $65 million, which represents a 45% increase over the prior year period. Based on our performance and outlook, we increased our quarterly distribution to $0.90 per limited partner unit for the quarter ended June 30, 2020. This distribution will be paid on August 12, 2020, and represents a 1.1% increase from the first quarter of 2020. This is our 29th consecutive quarterly increase and is 6% higher than our second quarter of 2019 distribution. At June 30, 2020, DKL had approximately $100 million of available capacity on our $850 million credit facility. Our total debt was approximately $995 million and the total leverage ratio was below 4.1 times, which is within the 5.5 times currently allowable under our credit facility. Now, I will return the call over to Blake to discuss the results.

Thanks, Reuven. For the second quarter of 2020, Delek Logistics reported net income attributable to all partners of $44.4 million, which compares to $24.9 million in the prior year period. Limited Partners' interest and net income in the second quarter was $34.8 million or $1.18 per unit compared to $16.8 million or $0.69 per unit in the prior year, representing approximately 107% increase year-over-year. In our pipelines and transportation segment, second quarter 2020 contribution margin was $43 million, compared to $24 million in the second quarter of 2019. This increase was primarily attributable to the recent asset drop-downs including the Permian gathering and trucking assets. Additionally, operating expenses decreased to $10 million in the second quarter of 2020 from $13 million in the prior year. In our wholesale marketing and terminalling segment contribution margin was $19 million in the second quarter of this year, which was a decrease from $20 million in the prior year. Lower Texas wholesale margins and Terminalling volumes were the primary drivers behind the year-over-year decrease. Operating expenses of $3 million were lower than the prior year period. Our West Texas wholesale gross margin was $0.64 a barrel in the second quarter of 2020 compared to $6.25 a barrel in the second quarter of the prior year. Throughput in West Texas was down 9,000 barrels a day compared to 11,000 barrels a day in the prior year period. During the same quarter of 2020, our equity income from joint venture crude oil pipelines was approximately $6 million compared to income of $5 million in the prior year period. Capital expenditures were approximately $1 million in the second quarter of 2020, which included a $300,000 in discretionary spending, $400,000 in sustaining maintenance. For full year 2020, our gross capital expenditures forecast is $18 million, which includes $13 million of discretionary and $6 million of maintenance CapEx. With that I'll turn the call over to Uzi for his closing remarks.

Thanks Blake and good morning everybody. Despite continued macro volatility associated with COVID-19, DKL delivered stellar financial performance in the second quarter. We announced the 29th consecutive increase in the quarterly distribution and remain confident in delivering 5% distribution growth this year. We exceeded our guidance for distribution coverage in the range of 1.4 to 1.5x and achieved this well before the original targeted date of year-end. We also expect our leverage ratio to continue trending down. Our outlook into the second half of the year remains positive and we expect progressive improvement over second quarter levels. We are seeing the impact of recent asset drop-downs along with asset optimization and business initiatives, such as the recent agreement with Jefferson Energy. This agreement improved the supply outlook for Paline and expanded its reach by giving shippers increased destination points for their crude, leading to better flexibility for our customers. Finally the Red River Pipeline expansion should enhance performance in the second half of the year. With that, operator can you please open the call for questions?

[Operator Instructions] The first question today comes from Spiro Dounis of Crédit Suisse. Please go ahead.

Hey, good morning guys. I would like to maybe start with results and then try and get an early look on what volumes look like so far in July. I guess a lot of your peers took a big dip in the second quarter, then saw a nice back in early parts of 3Q. You guys don't seem to appear to take that big of a dip. So, one just curious, how you're able to accomplish that and then as we're thinking about the go-forward here, what are trends looking like so far on the volume side near July?

Good morning, Spiro. So, I think you have several components to your question. The first one is the MVCs at the refineries as we mentioned. The refineries ran okay in the second quarter above MVCs, so there was no issue over there. In regard to the gathering system, as discussed in the past, the -- in the amount of -- or April and May, we had a dip. But since prices recovered in June and now in July, we are back to almost normality, call it 96%, 97% of the gathering as it existed before the pandemic started.

Great. And then as far as West Texas margins and volumes go, any sense on where those are trending now? Look like what it appears to be without the RINs, it would have been negative. Is that still the case or do you see that bouncing back as well?

Good morning Spiro. It's Avigal. We have seen during the heat of the pandemic a decline in demand mainly in April. Since then, in the second half of the quarter of Q2 and in July, we've seen a recovery more towards normality. So to your question, we see a recovery in that business unit.

Great. Last one for me. You now have your coverage started a lot sooner than expected. Curious when you look out, do you think about reaching that $400 million EBITDA in the next two to three years? Do you feel like now that's maybe leaning closer to the 2-year side than the 3-year side? And with at least one of those big boxes checked, I think leverage is the other target you're trying to achieve here. How close are you now at removing IDRs? Are there any other boxes you feel like you got to check before you get there?

Well, we are looking at these IDRs all the time. As we mentioned, we are committed -- very committed to DKL. And so, we are now close to 4x and above the 1.5. We'll continue to look at it. The outlook for DKL so far looks promising for the second part of the year. So, we will continue to look into that.

All right. Thanks guys. I will hop back into the queue.

[Operator Instructions] The next question comes from Ned Baramov of Wells Fargo. Please go ahead.

Hey. Good morning. Thanks for taking the question. One, on the agreement with Jefferson Energy, could you maybe provide additional details on the value of this arrangement? Are there any volume commitments or is there any CapEx associated with connecting to the terminal?

Avigal, why don't you take that?

Absolutely. So, we usually do not disclose them we see in the CapEx regarding specific agreement. But I would say that, it will allow us to have very good outlook for Paline for the next -- for the foreseeable future. That's one. And on the top of that, it allows Paline to have a line -- Paline system that have more than one destination and allow us much more flexibility going forward. So, it's very strategic and gives us a nice outlook and more optionality in the future.

Okay. That's helpful. And then question on OpEx. It seems that operating expenses declined quarter-over-quarter despite the addition of the big spring gathering assets and the trucking assets. I was just wondering how sustainable that is for the remainder of the year and in 2021?

Hey, Ned, it’s Odely. I'm going to take that question. So as we kind of look into Q2, we took a very -- cost control around the entire operation. And obviously you can see that's affected in Q2. As we're looking on the remainder of the year, we're looking to probably have some of the integrity work. But as we are looking into the extended, it's going to be probably additional of, call it $1 million for the quarter from those OpEx. So, with that said, it's going to be still improvement from previous year, but that’s going to be increasing to the Q2 as we're going to do more of an OpEx or integrity work for the remainder of the year, but we continue to remain with a very strict control around both our OpEx and G&A.

Okay. That's great. And then last one for me on the trucking assets acquisition. Could you maybe provide the contribution from these assets in the quarter? And do you plan to offer volume metrics related to this business going forward?

Hey, Ned, it's Blake. So the answer to the last question is we're probably not going to give volume details going forward, but I can offer you the contribution during the quarter was roughly $2 million from trucking and just about $8 million, maybe just south of that for DPG for the gathering business, so.

Perfect. Thank you. That’s all I had.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you. That was a wonderful quarter for DKL despite the rough macro environment. I think that our strategy all along was to continue to grow the Midstream segment of our business. And I think DKL has performed very well. I'd like to thank management around the table for their hard work. I'd like to thank, you investors in believing us, and obviously the Board of Directors for their confidence in us, and mainly our employees who make this company what it is. Have a great day, and we'll talk soon. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.