Keith Johnson – Vice President of Investor Relations Uzi Yemin – Chairman and CEO Assi Ginzburg – Executive Vice President and Chief Financial Officer Danny Norris – Chief Accounting Officer Mark D. Smith - Executive Vice President.

Gabe Moreen - Bank of America Merrill Lynch Theresa Chen - Barclays Capital Mark Reichman - Simmons & Company Richard Roberts - Howard Weil Michael Blum - Wells Fargo.

Good morning. My name is Shelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek Logistics Partners Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks there will be a question-and-answer session.

[Operator Instructions] Thank you. Keith Johnson, you may begin your conference..

Thank you, Shelly. Good morning. I would like to thank everyone for joining us on this webcast to discuss Delek Logistics Partners second quarter 2015 financial results. Joining me on today's call will be Uzi Yemin, our general partner's Chairman and CEO; Assi Ginzburg, CFO; Danny Norris, CAO; and 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 believes, 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 the 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.

Today's call is being recorded and will be available for replay beginning today and ending November 4, 2015 by dialing (855) 859-2056, with the confirmation ID number 69595329. An online replay may also be accessed for the next 90 days at the partnership's website at deleklogistics.com.

Last night, we distributed a press release that provides a summary of our second quarter 2015 results. This press release is available on our corporate website and through various news outlets. On today's call, Assi will begin with a few financial comments, and Danny will review our financial performance.

Then Uzi will offer a few closing strategic remarks. With that, I'll turn the call over to Assi..

Thank you, Keith. During the quarter, our operation showed solid improvement as our DCF ratio increased to 1.5 times in the second quarter of 2015 from a reported 1.2 times in the first quarter of 2015. This was driven by acquisition and increased contribution from assets supporting Delek US Tyler refinery, following its expansion in March.

On a year-over-year basis, our DCF was approximately $21 million and EBITDA was $26 million for the second quarter of 2015. This compared to a DCF of $24 million and EBITDA of $28 million in the prior year period.

Based on our performance, we are pleased to announce an increase in our quarterly dividend to $0.55 per limited partner unit for the quarter ended June 30, 2015, which is a 3.8% increase from our first quarter 2015 distribution per unit.

This is our 10th consecutive increase and is a 16% higher than our second quarter 2014 distribution of $0.475 per unit. Now I will turn the call over to Danny to discuss the financial results..

Thank you, Assi. For the second quarter of 2015, Delek Logistics reported net income attributable to all partners of $18.3 million, or $0.70 per diluted limited partner unit, compared to net income attributable to all partners of $21.8 million, or $0.87 per diluted limited partner unit in the prior year period.

Our performance during the quarter benefited from fees associated with the El Dorado offloading racks and the Tyler crude oil storage tank purchased on March 31, 2015. Acquisitions completed over the past year and a higher contribution margin from the Paline Pipeline compared to the second quarter of 2014.

These factors in the second quarter of 2015 were offset by a lower margin in the West Texas wholesale business. As a result, our contribution margin decreased to $28.8 million in the second quarter of this year from $30.2 million in the prior year period. Now I will spend a few minutes discussing our two reporting segments.

Second quarter of 2015 contribution margin in our Pipeline and Transportation segment improved to $20.9 million compared to $13.8 million in the second quarter 2014.

The improvement was primarily attributable to increased performance from the Paline Pipeline due to the new agreements effective on January 1 of 2015 and performance from the dropdowns purchased on March 31 of this year.

Contribution margin in our Wholesale Marketing and Terminalling segment was $8 million in the second quarter of this year, compared to $16.4 million in the prior year period.

This decrease was due to our west Texas wholesale business as the gross margin was $1.31 per barrel in the second quarter of this year, compared to $6.52 per barrel in the prior year period. This decrease in margin per barrel was primarily driven by a more competitive environment during the period.

Included in the gross margin per barrel was approximately $800,000 of higher cost due to ethanol fixed price contracts that were above average market prices in the second quarter of this year. In the year ago period, downtime at refineries in the region created a favorable supply/demand environment, which improved the gross margin per barrel.

The margin per barrel in the second quarter included approximately $1.7 million or $1.06 per barrel from RINs generated in our ongoing ethanol blending activities. This compares to a gross margin that included $1.1 million or $0.68 per barrel from RINs in the first quarter of last year.

On a year-over-year basis, volumes in the Tyler terminal and the East Texas marketing agreement were increased due to higher production rates at Delek US' Tyler, refinery, following the completion of its expansion project in March of this year. As of June 30, 2015, Delek Logistics total debt was $317 million.

We ended the quarter with approximately $378 million of unused availability under our $700 million credit facility. Our leverage ratio was 3.2 times well within the 4.75 times currently allowable under our credit facility.

Capital expenditures were approximately $6 million in the second quarter of this year, of which $1.4 million of CapEx was reimbursed under our Omnibus agreement with Delek US. Total capital expenditures for 2015 are expected to be $19.8 million, which includes $14.1 million of maintenance, $9.7 million of discretionary related projects.

Included in the 2015 amount is approximately $4 million of CapEx to be reimbursed under our agreement with Delek US. This compares to total capital expenditures in 2014 of approximately $7 million. With that, I will turn the call over to Uzi for his closing comments..

Thanks, Danny. Over the past year we have increased our more stable DCF business to acquisitions, improved contribution of the Paline Pipeline and high utilization in our East Texas asset supporting Delek US' Tyler refinery.

While our West Texas wholesale growth margin per barrel remains volatile, as we continue to grow it is expected to have a smaller impact on our performance. We'll remain focused on acquisition opportunities and with the recent change in commodity prices the environment has become more attractive as values have declined.

The combination of a strong balance sheet, operations that have limited commodity exposure and a strong sponsor creates flexibility for us as we evaluate different options. In addition, we continue to explore ways to partner with Delek US and the recent investment in Alon USA by Delek US may create additional growth opportunities for DKL.

The combination of our financial position and growth initiatives should support our target of an annual distribution increase of at least 15% for the year in the future. With that, Shelly would you please open the call for questions..

Certainly. [Operator Instructions] Your first question comes from the line of Gabe Moreen from Bank of America Merrill Lynch. Your line is now open..

Hi. Good morning, everyone. Quick couple of questions, I know Uzi you commented on the West Texas wholesale margins getting to be a smaller and smaller part of the business as everything grows. But I think in the past you had given us guidance for expected run rate on wholesale margins.

But given the commentary on drilling activity in West Texas, should we think about this quarter kind of being the run rate in terms of wholesale margins going forward in West Texas?.

I obviously don’t think so. I think this a volatile market. Activity is down, but I don’t think that the benchmark that we use, at least for now of $3 should be changed. We said in the past that’s its going to change. Now I realize that the activity in the market has changed.

But with the fact that the Phoenix in the Arizona market are very strong, I – or right now they are very strong because of California, I actually think that margins in West Texas may rebound. It doesn’t mean that we will see $3 day in, day out, but the $2 is a good benchmark.

Now, one thing that affects that and we need to compensate ourselves, is we use to have a very good ethanol business, as well as the RINs business. That structure has changed a bit, but on the other hand some far competitors are doing other things in their area and we believe that margins may and should rebound..

Thanks, Uzi.

And your comments on M&A both in the press release and on the call, could you just talk about I guess what you're seeing and also I guess the appetite that DKL might have to take on more commodity-sensitive assets and whether you want to ensure that DKL stays as fee based as possible when you do engage in the M&A or if you do?.

Well, that’s a great question, Gabe. You know I am not telling anything you don’t know yourself and probably better than I do. The pressure on E&P companies, as well as the pressure on the MLPs is mounting with the commodity exposure and we see more and more – honestly some MLPs that shouldn’t be MLP to start with, come under pressure.

And we will continue to maintain our fee based very stable, growth, long-term contract under the DKL arrangement or structure. It doesn’t mean that there are no opportunities in the market that you can actually split the exposure with either the sponsor or somebody else and continue to grow the business.

I do believe that there will be, and I said probably of 18 months ago, 24 months ago, we do believe that consolidation in the MLP spectrum, as well as more office coming online as a result of the E%P being under pressure will give us tremendous amount of opportunity for growth.

That’s the reason we maintain this strong balance sheet and we don’t jump with our distribution. Assi mentioned the coverage ratio of 1.5, the leverage is around three times. So tremendous amount of opportunity to do something in the area and as we proved in the past we can be very nimble and quick to react..

Great. Thank you, Uzi.

And then I guess just last question for me is in terms of the ALJ midstream assets, maybe any update they in terms of your I guess sizing of those potential assets, and also maybe timing, is that timing dependent on any third party M&A you might do?.

I would put it this way, without me commenting too much about what they are doing, they mentioned that they have these assets. Now obviously we are now involved with ALJ and we haven’t decided to do much yet obviously if we have decided – if we decide to that you'll be the first one to know in the market. But obviously it’s an avenue for growth.

Its apparent that we see an avenue for growth, we just to need to remember these are two different public companies and that will require arrangement for both companies not only from DK..

Great. Thank you, Uzi..

Thanks, Gabe..

Your next question comes from the line of Theresa Chen from Barclays Capital. Your line is now open..

Good morning. Good morning. I have first a follow up on Gabe's question around the Alon Midstream assets. It seems that even as recent as their June 2015 presentation that they still intend to carve out a logistics MLP and continues to talk about it publicly.

What's the likelihood in your opinion of that coming to fruition, and we're just all trying to gauge if these assets are actually going to be dropdown to DKL or not and I understand you don't want to comment explicitly on that, but this could be the final piece of the puzzle to get to your $150 million annualized EBITDA run rate target by Q4, '15.

So any clarity around this would be much appreciated?.

Well, it’s a good. There is only one caveat to that, that question should be presented to Alon at their capacity and they need to make a decision what they want to do with their assets. It doesn’t mean that we – as shareholders don’t have an opinion.

But the end of the day that’s a question that Paul Eisman needs to answer at his capacity as the CEO of the company. Obviously as we look at opportunities at LNJ and I am sure the sponsor, our sponsor will take this into account to the opportunities that are coming from their midstream assets. But the clarity should come from the company.

That’s one thing. Second, I think I said it in the past and I am going to say it again, we are confident with our one $150 million EBITDA by one way or another. So its not that we change our mind, so no. We said $150 million as we get out of 2015 we are confident of that $150 million EBITDA..

Fair enough.

So in effort to get to that target and related to your comments about third-party M&A, should we expect something to be announced in the near term? What's your timeline on that?.

There are not timeline on that. We already proved to the market that we can be fast and at the same time we can patient. The markets wanted us to grow fast on distribution and wanted to be patient on – in that regard, and the other side we proved that we can find these midstream assets when other people don’t hear about them.

I do believe that with what's going on in the marketplace the fee simple, a strong sponsor MLPs have advantage over other people without that structure. So now do we have any pressure, do we have – probably no pressure at all. We just – we're just committed to create value for our shareholders..

Thank you very much..

Your next question comes from the line of Mark Reichman from Simmons & Company. Your line is now open..

Yes, just a couple of questions. First on the West Texas wholesale business, just wanted to spend a little more time on the gross margin and the potential for improvement there.

Could you just break that up into pieces in terms of assigning the amount that you would say was due to the at a market, I guess ethanol, the fixed-price contracts versus your activities in terms of buying refined products from third parties and then selling them at your Texas terminals versus the RINs.

And which of those components would you expect to improve in order to get back to that $3 a barrel?.

Yes. This is Mark Smith. I think as you saw in our press release, we had the $800,000 kind of above market purchases of ethanol. And if you look that kind of we sold about 17000 barrels a day of product in West Texas. And so I guess you can kind of do the math and its $0.80 or so of the margin decreases related to that.

So we see the long-term margin at least over $2 and obviously RINs came down from $0.70 to $0.42 to $0.43 where they are now. So that’s you know, that’s another piece of the pie.

And if I think people who've been looking at the market place in the Dallas market in June there was a big inversion in the diesel market due to all the production from the group and Dallas market was trading about $0.06 under the Gulf Coast during that month for diesel. So that had a impact in it.

So as Uzi said, I think we believe that over the long-term the margins will be in the $3 range. Obviously though, as we said they will volatile depending on what's going on with production, I think if you saw yesterday's press release from our friends at Alon they had record production out there in West Texas in the second quarter.

So obviously the competitive market will be there and the market will continue to be volatile, but we still believe on average at a regular ethanol price blending economics and RINs values that $3 is the number..

So do you think for the back half of the year that you could see the volatility in the gross margin? In other words could we see – would you envision that we could see a swing back or do you think it's going to be a little more gradual to where maybe just your best, I guess your best guess there?.

I think it will be little bit more gradual as refineries and obviously we have a turnaround season coming here in the fall. So that’s going to have some effect on supply and demand in the group and the Gulf. And so we've already seen the margin in July increase above that $2 number.

So I think it will be gradual, but we should see it recover by the end of the year, at least that’s our forecast..

Okay.

And then also just what are your expectations on the Lion Pipeline system volumes for the remainder of the year?.

I am not sure I follow you, which….

The crude oil pipelines and the refined products pipelines look like the volumes were down a little bit year-over-year..

Well, that’s down a little bit, but we – that’s something that I wouldn’t read too much into it. The throughput is back up on this side. So I….

At the current rate..

So capacity will be something that you can assume..

Yes, okay. And then I guess most of my questions are answered with respect to the ALJ. What other, just I think the projects, the joint venture projects I think those are pretty well known at this point.

Is there anything else you can kind of comment in terms of organic growth opportunities?.

Well, you want to take that Assi?.

Sure. As me mentioned before the projects that if you've seen us reporting in West Texas in our mind are just the beginning of the developing trucking and gathering business in West Texas. Delek by itself even without ALJ buying over 100,000 barrels a day today in the midland area.

With the RIO pipeline for the first time we'll actually have a place to put those barrels. So we think that will naturally allow us not only to bring trucking to the area, but also to develop gathering business on the back of the RIO system. And we tend to do the same thing in East Texas.

So when we look organic, we think this is where our future currently is going to be focused on..

And I'd like to add one more thing to that if you don’t mind. One big initiative to our company as wee see more pressure on the middleman is to increase that gathering program. We are working very hard with that market, actually doing a lot of work around it. We didn’t announced it to the market yet.

But that’s going to be a huge we believe engine, growth engine for our company. We have a lot of knowledge in that area and the combination, the potential combination if there is a combination between Alon and Delek creates one of the biggest players in that area. So from gathering standpoint you should expect more out of DKL..

Very much appreciate it. Thank you..

And you next question comes from the line of Richard Roberts from Howard Weil. Your line is now open..

Good morning, guys. A couple of questions for me this morning. One of your larger peers was out last week announcing that they're going to look at dropping down their fuel distribution into their MLP.

Can you just update us, is this something you're looking at now and maybe can you give us any idea of what kind of EBITDA potential that could represent to the MLP?.

Good morning, Rich. I must say that you're persistent with that question. And I will sound like broken record. That structure actually fits MLP. It fits more mature retail business, as we grow our business and we are talking about now being in and if you look at the DK press release we had record gallons, these gallons continue to grow.

So the business is becoming more and more mature. That’s something that we potentially look at. Obviously others did it –it’s between $0.03 to $0.04.

You are talking about little less than $0.5 billion barrel for DKL only, obviously there are other potentials here as you know and we as DK decide to move forward with more stores, these gallons will continue to grow. So the math is very simple and that’s one of the reasons why we are confident with our growth pattern..

And so it's probably not unfair to assume that if there was any kind of a combination between Delek and Alon they obviously have a retail footprint as well.

That might give you the scale because it seems like scale is the bigger issue here?.

Well, first of all, the merger between us and Alon should happen and then after that we need to – or between the sponsors and us should happen and then only then we need to make a decision. But obviously one of the values that we see in doing something like that.

I want to be again clear that we have that structure that we continue to build, these mega store and will – the sponsors continue to build these mega stores and that is one of the growth engines, not only for the sponsor, but potentially for the DKL..

Got it. Thanks, Uzi. And then just one more.

Any updates on the Caddo Pipeline open season that you can provide?.

For the….

I don’t think we've done anything to update..

We have nothing to update, we'll probably do it in the future..

Okay. Fair enough. Thanks, guys..

Thanks, Rich..

[Operator Instructions] Your next question comes from the line of Michael Blum from Wells Fargo. Your line is now open..

Hi. Good morning, everyone..

Good morning..

I think most of my questions were addressed but just it looked like the East Texas volumes were pretty high this quarter at least relative to what we were looking at.

Was there anything going on there in particular that you can comment on?.

Well, obviously Delek expanded the Tyler refinery. We should expect this continue to grow. As you remember they extended their refining to 75,000, we are the marketing arm for that business. So there is no reason to believe that it won't grow..

Okay, great.

And then just to clarify, I think what I heard you say before in terms of achieving the $150 million EBITDA run rate by the fourth quarter, effectively you think you'll do that with or without the Alon assets?.

Well, obviously we have different paths to do it. So we just need to make the decision which path to pick, in order create value for shareholders. There are different avenues to achieve that and we just need to – internal decision how to move forward..

Okay. Great. Thank you..

There are no further questions at this time. I'll turn the call back over to the presenters..

Thank you, Shelly. I’d like to thank management around the table. Obviously I'd like to thank the board of directors, new investors for the continued confidence in us. Mostly, I'd like to thank our employees and the people that make this company what it is. And we think that there is a clear path for growth for us, so very exciting times ahead of us.

Thank you and have a great day..

This concludes today's conference call. You may now disconnect..