Management's Discussion and ~~Restated Agreement of Limited Partnership of Delek Logistics Partners, LP~~Analysis

On March 31, 2020, in connection with the completion of the Big Spring Gathering Assets Acquisition, the Board of the general partner adopted Amendment No. 2 (“Amendment No. 2”) to the Partnership Agreement, effective upon adoption. Amendment No. 2 amends the Partnership Agreement to provide for a waiver of distributions in respect of the Incentive Distribution Rights ("IDRs") associated with the 5.0 million newly issued common units ("Additional Units") for at least two years, through at least the distribution for the quarter ending March 31, 2022 ("IDR Waiver"). The IDR Waiver essentially reduces the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the Additional Units. An additional waiver letter has been signed that waives all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. Refer to Note 3 to our accompanying condensed consolidated financial statements for additional information.

How We Generate Revenue

The Partnership generates revenue by charging fees to Delek Holdings and third parties for gathering, transporting, offloading and storing crude oil and for marketing, distributing, transporting, throughputting and storing intermediate and refined products. We also wholesale market refined products primarily in the West Texas market. A substantial majority of our contribution margin, which we define as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization, is derived from commercial agreements with Delek Holdings with initial terms ranging from five to ten years, which gives us a contractual revenue base that we believe enhances the stability of our cash flows. As more fully described below, our commercial agreements with Delek Holdings typically include minimum volume or throughput commitments by Delek Holdings, which we believe will provide a stable revenue stream in the future. The fees charged under our agreements with Delek Holdings and third parties are indexed to inflation-based indices. In addition, the rates charged with respect to our assets that are subject to inflation indexing may increase or decrease, typically on July 1 of each year, by the amount of any change in various inflation-based indices, including FERC, provided that in no event will the fees be adjusted below the amount initially set forth in the applicable agreement.

Commercial Agreements with Delek Holdings

The Partnership has a number of long-term, fee-based commercial agreements with Delek Holdings under which we provide various services, including crude oil gathering, ~~and~~ crude oil, intermediate and refined products transportation and storage services, and marketing, terminalling and offloading services to Delek Holdings, and Delek Holdings commits to provide us with minimum monthly throughput volumes of crude oil, intermediate and refined products. Generally, these agreements include minimum quarterly volume, revenue or throughput commitments and have tariffs or fees indexed to inflation-based indices, provided that the tariffs or fees will not be decreased below the initial amount. See our Annual Report on Form 10-K filed with the SEC on ~~February 27, 2020~~March 1, 2021 for a discussion of our material commercial agreements with Delek Holdings.

Other Transactions

Starting in 2018, the Partnership manages a long-term capital project on behalf of Delek Holdings pursuant to a construction management and operating agreement (the "DPG Management Agreement") for the construction of a 250-mile gathering system in the Permian ~~Basin. The majority~~Basin (the "Delek Permian Gathering Project"). As of March 31, 2021, approximately 183 miles of the gathering system ~~has been constructed,~~were completed and operational, however, additional costs pertaining to a pipeline connection that was not contributed to the Partnership continue to be incurred and are still subject to the terms of the DPG Management Agreement. The Partnership is also considered the operator for the project and is responsible for the oversight of the project design, procurement and construction of project segments and for providing other related services. See Note 43 to our accompanying condensed consolidated financial statements for additional information on the DPG Management Agreement.

How We Evaluate Our Operations

We use a variety of financial and operating metrics to analyze our segment performance. These metrics are significant factors in assessing our operating results and profitability and include:


~~(i)~~	~~volumes (including pipeline throughput and terminal volumes);~~


~~(ii)~~	~~contribution margin per barrel;~~


~~(iii)~~	~~operating and maintenance expenses;~~

(i)volumes (including pipeline throughput and terminal volumes);

(ii)contribution margin per barrel;


~~(iv)~~	~~cost of materials and other; and~~


~~(v)~~	~~EBITDA and distributable cash flow (as such terms are defined below).~~

(iii)operating and maintenance expenses;

(iv)cost of materials and other; and

(v)EBITDA and distributable cash flow (as such terms are defined below).

Volumes



~~27 \|~~

~~Management's Discussion and Analysis~~

The amount of revenue we generate primarily depends on the volumes of crude oil and refined products that we handle in our pipeline, transportation, terminalling, storage and marketing operations. These volumes are primarily affected by the supply of and demand for crude oil, intermediate and refined products in the markets served directly or indirectly by our assets. Although Delek Holdings has committed to minimum volumes under certain of the commercial agreements, as described above, our results of operations will be impacted by:

•Delek Holdings' utilization of our assets in excess of its minimum volume commitments;

•our ability to identify and execute acquisitions and organic expansion projects, and capture incremental volume increases from Delek Holdings or third parties;

•our ability to increase throughput volumes at our refined products terminals and provide additional ancillary services at those terminals;

•our ability to identify and serve new customers in our marketing and trucking operations; and

•our ability to make connections to third-party facilities and pipelines.


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Management's Discussion and Analysis

Contribution Margin per Barrel

Because we do not allocate general and administrative expenses by segment, we measure the performance of our segments by the amount of contribution margin as generated in operations. Contribution margin is defined as net revenues less cost of materials and other and operating expenses, excluding depreciation and amortization.

For our wholesale marketing and terminalling segment, we also measure gross margin per barrel. Gross margin per barrel reflects the gross margin (net revenues less cost of materials and other) of the wholesale marketing operations divided by the number of barrels of refined products sold during the measurement period. Both contribution margin and gross margin per barrel can be affected by fluctuations in the prices and cost of gasoline, distillate fuel, ethanol and ~~Renewable Identification Numbers ("RINs").~~RINs. Historically, the profitability of our wholesale marketing operations has been affected by commodity price volatility, (specifically as it relates to changes in the price of refined products between the time we purchase such products from our suppliers and the time we sell the products to our wholesale customers), and the fluctuation in the value of RINs. Commodity price volatility may also impact our wholesale marketing operations when the selling price of refined products does not adjust as quickly as the purchase price. Our wholesale marketing gross margin may also be impacted by fixed price ethanol agreements that we enter into to fix the price we pay for ethanol.

Operating and Maintenance Expenses

We seek to maximize the profitability of our operations by effectively managing operating and maintenance expenses. These expenses include the costs associated with the operation of owned terminals and pipelines and terminalling expenses at third-party locations, excluding depreciation and amortization. These costs primarily include outside services, allocated employee costs, repairs and maintenance costs and energy and utility costs. Operating expenses related to the wholesale business are excluded from cost of sales because they primarily relate to costs associated with selling the products through our wholesale business. These expenses generally remain relatively stable across broad ranges of throughput volumes, but can fluctuate from period to period depending on the mix of activities performed during that period and the timing of these expenses. Additionally, compliance with federal, state and local laws and regulations relating to the protection of the environment, health and safety may require us to incur additional expenditures. We will seek to manage our maintenance expenditures on our pipelines and terminals by scheduling maintenance over time to avoid significant variability in our maintenance expenditures and minimize their impact on our cash flow.

Cost of Materials and Other

These costs include:


(i)			all costs of purchased refined products in our wholesale marketing and terminalling segment, as well as additives and related transportation of such products;


(ii)	costs associated with the operation of our trucking assets, which primarily include allocated employee costs and other

costs related to fuel, truck leases and repairs and maintenance;

~~costs related to fuel, truck leases and repairs and maintenance;~~


(iii)			the cost of pipeline capacity leased from any third parties; and


(iv)	gains and losses related to our commodity hedging activities.

Financing

The Partnership has declared its intent to make a cash distribution to its unitholders at a distribution rate of ~~$0.890~~$0.920 per unit for the quarter ended March 31, ~~2020~~2021 ($~~3.56~~3.680 per unit on an annualized basis). Our Partnership Agreement requires that the Partnership distribute all of its available cash (as defined in the Partnership Agreement) to its unitholders quarterly. As a result, the Partnership expects to fund future capital expenditures primarily from operating cash flows, borrowings under our DKL Credit Facility and any potential future issuances of equity and debt securities. See Note 8 to the accompanying condensed consolidated financial statements for a discussion of historic cash distributions.



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Management's Discussion and Analysis

Market Trends

~~Master Limited Partnerships~~Business Environment

Fluctuations in crude oil prices and the prices of related refined products impact our operations and the operations of other master limited partnerships in the midstream energy sector. In particular, crude oil prices and the prices of related refined products have the ability to influence drilling activity in many basins and the amounts of capital spending that crude oil exploration and production companies incur to support future growth. ~~During the first half of 2019, the prices of crude oil and related refined products increased but fell slightly in the second half of 2019.~~

During the first quarter of 2021, although the on-going COVID-19 Pandemic continues to negatively affect economic trends, signs of economic recovery are starting to show resulting in increases in consumption and demand for crude oil and refined products. Compared to the first quarter of 2020, where reduced demand for crude oil and refined products related to the COVID-19 Pandemic, combined with production increases from ~~OPEC,~~OPEC+, had led to a significant reduction in crude oil ~~prices. Oil~~ prices, ~~remain extremely volatile,~~crude oil prices during the first quarter of 2021 have been increasing. Commodity prices are showing signs of recovery and are expected to continue recovering in 2021 as the U.S. federal and state governments increase the rollout of vaccinations. The opening January 2021 price of oil (WTI Cushing) was $47.62 and reached the January 2021 high closing price of oil ~~(WTI-Cushing) reached a first quarter 2020 high~~ of ~~$63.27~~$53.57 per barrel, which further increased to close at $59.16 per barrel on ~~January 6, 2020,and closed at $8.91 per barrel~~March 31, 2021. Oil prices reached a high of $66.09 on ~~April 21, 2020. In response~~March 5, 2021. Due to the ~~rapid decline~~stabilization in ~~commodity~~oil prices, ~~some companies in the Permian Basin acted swiftly to reduce drilling and completion activity starting late in~~during the first ~~quarter. We have not~~quarter of 2021, we experienced ~~a significant decrease in demand for our assets and our operations as a result of this environment; however we continue to monitor the market conditions closely particularly~~improved margins in the West Texas area, ~~where~~and better throughput for our ~~results are most driven by market factors. Due~~assets with improved gross margins, when compared to the ~~decrease in oil prices, we are beginning to experience thinner margins in the West Texas area.~~first quarter of 2020. We believe we are strategically positioned, in these tougher market conditions to continue to developing profitable growth projects that are needed to support future distribution growth in the midstream energy sector ~~and~~ for the Partnership.

We are aware that certain industry participants structured as master limited partnerships have addressed certain key variables (including investor sentiments, declining distributions, and recent changes in tax law, among others) by restructuring as entities subject to tax as corporations. These variables are unique for each such restructuring or restructured master limited partnership. We have no current plan or intention to undertake a similar restructuring.

West Texas Marketing Operations

Overall demand for gathering and terminalling services in a particular area is generally driven by crude oil production in the area, which can be impacted by crude oil prices, refining economics and access to alternate delivery and transportation infrastructure. Additionally, volatility in crude oil, intermediate and refined products prices in the West Texas area and the value attributable to RINs can affect the results of our West Texas operations. For example, as discussed above, drilling activity and the prices of crude oil and related refined products increased in the first half of 2019 and in spite of a slight decrease in prices in the ~~second half~~third quarter of 2019, demand for refined products from our West Texas operations to industries that support crude oil exploration and production began to rebound early in the first quarter of 2020. However due to the impact of ~~OPEC production increases,~~the COVID-19 Pandemic there was lower demand and sales of refined products during the ~~resulting drop in oil prices,~~latter part of the first quarter of 2020 and remained largely depressed during most of 2020. In the first quarter of 2021, demand for and prices of crude oil and related refined products ~~is dampening.~~increased as economic activity began to recover due to the increase in vaccinations.

See the chart below for the high, low and average price per barrel of WTI crude oil for each of the quarterly periods in ~~2019~~2020 and for the three months ended March 31, ~~2020.~~2021.

~~Also, the~~The volatility of refined products prices may impact our margin in the West Texas operations when the selling price of refined products does not adjust as quickly as the purchase price. See the charts below for the range of prices per gallon of gasoline and diesel for each of the quarterly periods in ~~2019~~2020 and for the three months ended March 31, ~~2020.~~

2021.



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Management's Discussion and Analysis

Our West Texas operations can benefit from RINs that are generated by ethanol blending activities. As a result, changes in the price of RINs can affect our results of operations. The RINs we generate are sold primarily to Delek Holdings at market prices. We sold approximately ~~$0.8~~$2.4 million and ~~$0.3~~$0.8 million of RINs to Delek Holdings during the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. See below for the high, low and average prices of RINs for each of the quarterly periods in ~~2019~~2020 and in the three months ended March 31, ~~2020.~~2021.


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Management's Discussion and Analysis

All of these factors are subject to change over time. As part of our overall business strategy, management considers aspects such as location, acquisition and expansion opportunities and factors impacting the utilization of the refineries (and therefore throughput volumes), which may impact our performance in the market.


31 \|

Management's Discussion and Analysis

Contractual Obligations

There have been no material changes to our contractual obligations and commercial commitments during the three months ended March 31, ~~2020,~~2021 from those disclosed in our Annual Report on Form 10-K.



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~~Management's Discussion and Analysis~~

Critical Accounting Policies

The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The SEC has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results of operations and require our most difficult, complex or subjective judgments or estimates. Based on this definition and as further described in our Annual Report on Form 10-K, we believe our critical accounting policies include the following: (i) evaluating impairment for property, plant and equipment and intangibles, and (ii) evaluating potential impairment of goodwill.

Additionally, due to the economic and industry impact of the COVID-19 Pandemic and the OPEC Production Disputes, we also modified the application of certain of our critical accounting policies during and as of the three months ended March 31, 2020 as follows:

~~Goodwill and Potential Impairment~~

~~Our annual goodwill impairment analysis is performed during the fourth quarter of each year. Under~~ ~~ASC 350, Intangibles - Goodwill and Other~~, goodwill of a reporting unit shall be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

We have identified two significant events that arose during the three months ended March 31, 2020 that adversely affected the global economy and the oil and gas industry. These two events are the COVID-19 Pandemic and the OPEC Production Disputes (previously defined), both of which had the secondary effect of impacting prices of crude oil and refined products as well as supply and demand for crude oil and refined products, and triggered several identified uncertainties, as discussed in the 'Business Overview' section of Management's Discussion and Analysis. Our assessment was performed based on the events that had occurred through March 31, 2020 and excluded developments that occurred in the subsequent period, including but not limited to government-imposed temporary business closures and voluntary shelter-at-home directives as well as developments in production discussions between global oil producers, and the effect thereof. In order to determine whether these events, including the developments around such events that had occurred through March 31, 2020 and our assumptions about future periods based on those events and related developments, would more likely than not reduce the fair value of a reporting unit below its carrying amount, we performed certain analyses on the most significant inputs in our valuation model to evaluate the impact of these events on the fair value of our reporting units. This included sensitivity analysis and stress testing on certain of our inputs to our valuation model, including the weighted-average cost of capital and the barrel per day ("BPD") sold/throughput, which is driven by demand for crude oil and refined products. Except for West Texas, our throughput volume is primarily driven by the minimum throughput in our commercial agreements with Delek Holdings. Based on our analyses (which, as noted above, were based on the conditions and events that had occurred as of March 31, 2020), we determined that there is not an indicator that fair value is more likely than not to have declined below carrying value as of March 31, 2020.

Additionally, because conditions and events are rapidly changing, we continue to monitor developments with these events and their impact on our valuation. However, there is uncertainty in and around the impact of the COVID-19 Pandemic and the OPEC Production Disputes that have not yet occurred or for existing conditions and events that may have future ramifications that cannot yet be anticipated. Continued or sustained adverse change to these factors may result in potential future impairment of some or all of our goodwill balance.

Other than as described above, for all financial statement periods presented, there have been no material modifications to the application of these critical accounting policies or estimates since our most recently filed Annual Report on Form 10-K. See Note 1 of the condensed consolidated financial statements in Item 1, Financial Statements for discussion of updates to our accounting policies.

Non-GAAP Measures

Our management uses certain "non-GAAP" operational measures to evaluate our operating segment performance and non-GAAP financial measures to evaluate past performance and prospects for the future to supplement our GAAP financial information presented in accordance with U.S. GAAP. These financial and operational non-GAAP measures are important factors in assessing our operating results and profitability and include:


•			Earnings before interest, taxes, depreciation and amortization ("EBITDA") - calculated as net income before net interest expense, income tax expense, depreciation and amortization expense, including amortization of customer contract intangible assets, which is included as a component of net revenues in our accompanying condensed consolidated statements of income.


•	Distributable cash flow - calculated as net cash flow from operating activities plus or minus changes in assets and liabilities, less maintenance capital expenditures net of reimbursements and other adjustments not expected to settle in cash. ~~Delek Logistics~~The Partnership believes this is an appropriate reflection of a liquidity measure by which users of its financial statements can assess its ability to generate cash.



~~31 \|~~

~~Management's Discussion and Analysis~~

EBITDA and distributable cash flow are non-U.S. GAAP supplemental financial measures that management and external users of our condensed consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

•our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA, financing methods;

•the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;

•our ability to incur and service debt and fund capital expenditures; and

•the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

We believe that the presentation of EBITDA and distributable cash flow provide information useful to investors in assessing our financial condition and results of operations. EBITDA and distributable cash flow should not be considered alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all, items that affect net income and net cash provided by operating activities. Additionally, because EBITDA and distributable cash flow may be defined differently by other partnerships in our industry, our definitions of EBITDA and distributable cash flow may not be comparable to similarly titled measures of other partnerships, thereby diminishing their utility. For a reconciliation of EBITDA and distributable cash flow to their most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, please refer to "Results of Operations" below.



32 \|


◦			~~the average volumes of gasoline sold increased 13.3 million gallons and diesel sold decreased 1.3 million gallons, respectively.~~


◦	~~the average cost per gallon of gasoline and diesel sold decreased $0.10 per gallon and $0.30 per gallon, respectively.~~

~~inventory net realizable value charge amounting to $2.9 million due to $0.92 per barrel markdown on inventory.~~



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Cost of Materials and Other

Q1 2021 vs. Q1 2020

~~Management's Discussion~~Cost of materials and ~~Analysis~~

~~Operating Expenses~~

~~QTD 2020 vs. QTD 2019~~

~~Operating expenses~~other decreased by ~~$1.3~~$20.1 million, or ~~8.2%~~19.9%, in the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019,~~2020, primarily driven by the following:

•decreases in the average volumes of gasoline and diesel sold, partially offset by increases in the average cost per gallon of gasoline


35 \|

Management's Discussion and Analysis

and diesel sold in our West Texas marketing operations:

◦the average volumes of gasoline and diesel sold decreased by 13.9 million gallons and 9.2 million gallons, respectively.

◦the average cost per gallon of gasoline and diesel sold increased by $0.27 per gallon and $0.10 per gallon, respectively.

Operating Expenses

Q1 2021 vs. Q1 2020

Operating expenses decreased by $0.7 million, or 4.7%, in the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily driven by the following:

•decrease in employee and outside services costs due to measures implemented to respond to the COVID-19 Pandemic including delaying non-essential projects;

•lower operating costs associated with allocated contract services pertaining to certain of our assets;

•decreases in variable expenses such as maintenance and materials costs due to lower throughput; and

~~decrease in utilities expense.~~

~~These decreases were~~ •partially offset ~~by:~~

~~higher employee~~by the increase in utility costs ~~allocated to us~~ as a result of ~~an increase in allocated employee headcount in various operational groups as~~significantly higher energy costs during the ~~Partnership continues to experience growth.~~February 2021 severe freezing conditions that affected most of the regions where we operate.

General and Administrative Expenses

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

General and administrative expenses ~~increased~~decreased by ~~$1.7~~$1.3 million, or ~~37.0%~~20.7%, in the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019,~~2020, primarily driven by the following:

~~increases in allocated employee headcount in various operational groups as the Partnership continues to experience growth; and~~

~~increases~~•decrease in legal and professional consulting fees due to ~~various~~fewer transactions undertaken by the ~~Partnership.~~Partnership compared to prior year; and

•decrease in employee and outside services costs due to measures implemented to respond to the COVID-19 Pandemic.

Depreciation and Amortization

~~The changes in depreciation~~Q1 2021 vs. Q1 2020

Depreciation and amortization ~~for the first quarter of 2020 compared to the first quarter of 2019 were immaterial.~~

~~Interest Expense~~

~~QTD 2020 vs. QTD 2019~~

~~Interest expense~~ increased by ~~$0.5~~$4.4 million, or ~~4.6%~~70.5%, in the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019,~~2020, primarily driven by the following:

•addition of assets to our asset base as a result of the Trucking Assets Acquisition and the Big Spring Gathering Assets Acquisition.

Interest Expense

Q1 2021 vs. Q1 2020

During the three months ended March 31, 2021 we incurred $9.7 million of interest expense, compared to $11.8 million during the three months ended March 31, 2020, a decrease of $2.1 million, or 17.7%. This decrease was primarily driven by the following:

•lower floating interest rates applicable to the DKL Credit Facility; and

•partially offset by increased borrowings under the DKL Credit Facility as a result of our ~~contribution to~~Big Spring Gathering Assets Acquisition, the ~~Red River Pipeline Joint Venture in May 2019, prior to which we had lower average debt balances;~~Trucking Assets Acquisition and the IDR Restructuring Transaction.

~~partially offset by lower floating interest rates applicable to the DKL Credit Facility.~~

Results from Equity Method Investments

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

During the three months ended March 31, ~~2020,~~2021 we recognized income of ~~$5.6~~$4.0 million from equity method investments, compared to ~~$2.0~~$5.6 million for the three months ended March 31, ~~2019, an increase~~2020, a decrease of ~~$3.6~~$1.5 million, or ~~184.6%~~27.1%. This ~~increase~~decrease was primarily driven by the following:

~~the addition of the Red River Pipeline Joint Venture in May 2019 as a result of the Partnership's efforts to grow the midstream business; and~~

~~an increase in income from our investments in Andeavor Logistics and CP LLC.~~



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Management's Discussion and Analysis

•decrease in income from our equity method investments due to lower volumes as the impact of the February 2021 severe freezing conditions was pervasive across all of our equity method investments' pipeline systems;

•our equity method investments includes our investment in the Red River Pipeline Joint Venture and our investments in Andeavor Logistics and CP LLC (as defined in Note 10 of the accompanying condensed consolidated financial statements), which operate the Rio Pipeline and the Caddo Pipeline System, respectively.


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Management's Discussion and Analysis

Operating Segments

We review operating results in two reportable segments: (i) pipelines and transportation and (ii) wholesale marketing and terminalling. Decisions concerning the allocation of resources and assessment of operating performance are made based on this segmentation. Management measures the operating performance of each reportable segment based on the segment contribution margin. Segment reporting is discussed in more detail in Note 11 to our accompanying condensed consolidated financial statements.



Segment contribution margin =	Net revenues -	Cost of materials and other -	Operating expenses, excluding depreciation and amortization

Pipelines and Transportation Segment

Our pipelines and transportation segment assets provide crude oil gathering and crude oil, intermediate and refined products transportation and storage services to Delek Holdings and third parties. These assets include:

•the pipeline assets used to support Delek Holdings' El Dorado refinery (the "El Dorado Assets")

•the gathering system that supports transportation of crude oil to the El Dorado Refinery (the "El Dorado Gathering System")

•the Paline Pipeline System

•the East Texas Crude Logistics System

•the Tyler-Big Sandy Pipeline

•the El Dorado Tank Assets and El Dorado Rail Offloading Racks

•the Tyler Tank Assets and Tyler Crude Tank

•the Greenville-Mount Pleasant Pipeline and Greenville Storage Facility

•refined product pipeline capacity leased from Enterprise TE Products Pipeline Company ("Enterprise") that runs from El Dorado, Arkansas to our Memphis terminal and the Big Spring Pipeline

•pipelines and storage assets acquired in the Big Spring Logistic Assets Acquisition

•assets acquired in the Big Spring Gathering Assets Acquisition

•assets acquired in the Trucking Assets Acquisition

In addition to these operating systems, we own or lease ~~123~~264 tractors and ~~174~~353 trailers used to haul primarily crude oil and other products for related and third parties.

The following tables and discussion present the results of operations and certain operating statistics of the pipelines and transportation segment for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


Pipelines and Transportation
	Three Months Ended March 31,
		2021		2020
Net Revenues:
Affiliates		$	63,048	$	38,502
Third-Party		1,927		9,465
Total Pipelines and Transportation		64,975		47,967

Cost of materials and other		13,079		6,098
Operating expenses (excluding depreciation and amortization presented below)		10,172		11,456
Segment contribution margin		$	41,724	$	30,413


Throughputs (average bpd)
	Three Months Ended March 31,
		2021	2020










El Dorado Assets:
Crude pipelines (non-gathered)		44,118	55,471
Refined products pipelines to Enterprise Systems		26,349	54,106
El Dorado Gathering System		11,880	34,906
East Texas Crude Logistics System		26,075	14,174

Big Spring Gathering System		73,724	—
Plains Connection System		108,361	—

Pipelines and Transportation
Three Months Ended March 31,
2020 2019
Net Revenues:
Affiliates $ 38,502
$ 36,659
Third-Party 9,465
3,974
Total Pipelines and Transportation 47,967
40,633
Cost of materials and other 6,098
5,567
Operating expenses (excluding depreciation and amortization presented below) 11,456
10,834
Segment contribution margin $ 30,413
$ 24,232

Throughputs (average bpd)
Three Months Ended March 31,
2020 2019
El Dorado Assets:
Crude pipelines (non-gathered) 55,471
28,683
Refined products pipelines to Enterprise Systems 54,106
23,092
El Dorado Gathering System 34,906
16,998
East Texas Crude Logistics System 14,174
18,113



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Management's Discussion and Analysis

Comparison of the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019~~2020

Net Revenues

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

Net revenues for the pipelines and transportation segment increased by ~~$7.3~~$17.0 million, or ~~18.0%~~35.5%, in the three months ended March 31, ~~2020 compared to the three months ended March 31, 2019, primarily driven by the following:~~

increased revenues associated with our Paline Pipeline as a result of increased rates and a change in the fee structure from the three months ended March 31, 2019 during which the capacity of the Paline Pipeline was contracted to separate parties for a monthly fee2021 compared to the three months ended March 31, 2020, ~~during~~primarily driven by the following:

•increased revenues associated with agreements executed in connection with the Big Spring Gathering Assets Acquisition and the Trucking Assets Acquisition, which were effective March 31, 2020 and May 1, 2020, respectively. See Note 2 of the ~~pipeline was subject to a FERC tariff; and~~condensed consolidated financial statements in Item 1. Financial Statements, for additional information;

•increased revenues at our ~~El Dorado Gathering System and Magnolia~~BSR Crude Pipeline, as a result of ~~increased throughput~~new contracts executed in the second quarter of 2020, during the three months ended March 31, ~~2020~~2021 when compared to the three months ended March 31, ~~2019.~~2020; and

•partially offset by, decreases in throughputs due to the impact of the severe freezing conditions that affected most of the regions where we operate resulting in lower volumes outside of contractual minimum volume commitments and decreases in throughputs at the Paline pipeline due to scheduled pipeline maintenance during the three months ended March 31, 2021 when compared to the three months ended March 31, 2020.

Cost of Materials and Other

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

Cost of materials and other for the pipelines and transportation segment increased by ~~$0.5~~$7.0 million, or ~~9.5%~~114.5%, in the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019,~~2020, primarily driven by the following:

•increases in transportation costs related to our ~~trucking assets, including~~Trucking Assets due to the Trucking Asset Acquisition which was effective May 1, 2020; and

•increases in driver wages and benefits and fuel expense proportionate to ~~increase~~increases in fees, insurance, supplies and maintenance expenses.

Operating Expenses

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

Operating expenses for the pipelines and transportation segment ~~increased $0.6~~decreased by $1.3 million, or ~~5.7%~~11.2%, in the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019,~~2020, primarily driven by the following:

~~higher~~•decreases in employee and outside services costs ~~allocated~~due to usmeasures implemented to respond to the COVID-19 Pandemic including delaying non-essential projects; and

•partially offset by the increase in utility costs as a result of ~~an increase in allocated employee headcount in various operational groups as~~significantly higher energy costs during the ~~Partnership continues to experience growth; and~~February 2021 severe freezing conditions that affected most of the regions where we operate.

a higher incentive expense allocated to us as a result of an increase in the incentive accrual and increase in allocated employee headcount in various operational groups as the partnership continues to experience growth.

~~These increases were partially offset by:~~

~~decreases in variable expenses such as utilities, maintenance and materials costs.~~

Contribution Margin

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

Contribution margin for the pipelines and transportation segment increased by ~~$6.2~~$11.3 million, or ~~25.5%~~37.2%, in the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019,~~2020, primarily driven by the following:

•increases in ~~net~~ revenues ~~generated under the agreement~~associated with agreements executed in connection with ~~our Paline Pipeline System as described above.~~the Big Spring Gathering Assets Acquisition, the Trucking Assets Acquisition and the BSR Crude Pipeline;

~~increases~~•decreases in ~~revenues at the El Dorado Gathering System~~operating expenses; and ~~Magnolia Pipeline due to increased throughput as described above.~~

~~the net revenue was~~•partially offset by the increase in cost of materials and other ~~and~~ in ~~operating expenses, as described above.~~

connection with the Trucking Assets Acquisition.


3839 \|

Management's Discussion and Analysis

Wholesale Marketing and Terminalling Segment

We use our wholesale marketing and terminalling assets to generate revenue by providing wholesale marketing and terminalling services to Delek Holdings' refining operations and to independent third parties.

The tables and discussion below present the results of operations and certain operating statistics of the wholesale marketing and terminalling segment for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020:


Wholesale Marketing and Terminalling
	Three Months Ended March 31,
		2021		2020
Net Revenues:
Affiliates		$	33,146	$	68,197
Third-Party		54,792		47,237
Total Wholesale Marketing and Terminalling		87,938		115,434

Cost of materials and other		68,092		95,195
Operating expenses (excluding depreciation and amortization presented below)		3,884		3,288
Segment contribution margin		$	15,962	$	16,951

Wholesale Marketing and Terminalling
Three Months Ended March 31,
2020 2019
Net Revenues:
Affiliates $ 68,197
$ 26,306
Third-Party 47,237
85,544
Total Wholesale Marketing and Terminalling 115,434
111,850
Cost of materials and other 95,195
90,698
Operating expenses (excluding depreciation and amortization presented below) 3,288
5,224
Segment contribution margin $ 16,951
$ 15,928

Operating Information
Three Months Ended March 31,
2020 2019
East Texas - Tyler Refinery sales volumes (average bpd)⁽¹⁾
72,650
68,577
Big Spring marketing throughputs (average bpd) 66,386
87,741
West Texas marketing throughputs (average bpd) 16,081
13,314
West Texas gross margin per barrel $ 2.70
$ 3.56
Terminalling throughputs (average bpd) ⁽²⁾
135,329
152,469


Operating Information
	Three Months Ended March 31,
		2021		2020









East Texas - Tyler Refinery sales volumes (average bpd) (1)		71,963		72,650
Big Spring marketing throughputs (average bpd)		72,927		66,386
West Texas marketing throughputs (average bpd)		10,138		16,081
West Texas gross margin per barrel		$	3.42	$	2.70



Terminalling throughputs (average bpd) (2)		144,539		135,329



(1)			Excludes jet fuel and petroleum coke.
(2)			Consists of terminalling throughputs at our Tyler, Big Spring, Big Sandy and Mount Pleasant, Texas, El Dorado and North Little Rock, Arkansas and Memphis and Nashville, Tennessee terminals.

Comparison of the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019~~2020

Net Revenues

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

Net revenues for the wholesale marketing and terminalling segment ~~increased~~decreased by ~~$3.6~~$27.5 million, or ~~3.2%~~23.8%, in the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019,~~2020, primarily driven by the following:

~~increases~~•decreases in the average volumes of gasoline and diesel sold, ~~and decreases~~partially offset by increases in the average sales prices per gallon of gasoline and diesel sold in our West Texas marketing ~~operations.~~


◦	~~the average volumes of gasoline sold increased 13.3 million gallons partially offset by decrease of 1.3 million gallons in diesel sold.~~


◦	~~the average sales prices per gallon of gasoline and diesel sold decreased $0.12 per gallon and $0.37 per gallon, respectively.~~

operations:

◦the volume of gasoline and diesel sold decreased by 13.9 million gallons and 9.2 million gallons, respectively.

◦the average sales prices per gallon of gasoline and diesel sold increased by $0.24 per gallon and $0.12 per gallon, respectively.



3940 \|

Management's Discussion and Analysis

The following charts show summaries of the average sales prices per gallon of gasoline and diesel and refined products volume impacting our West Texas operations.

Cost of Materials and Other

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

Cost of materials and other for our wholesale marketing and terminalling segment ~~increased~~decreased by ~~$4.5~~$27.1 million, or ~~5.0%~~28.5%, in the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019,~~2020, primarily driven by the following:

~~increases~~•decreases in the average volumes of gasoline and ~~decreases~~diesel sold, partially offset by increases in the average cost per gallon of gasoline and diesel sold in our West Texas marketing ~~operations.~~operations:


◦	~~the average volumes of gasoline sold increased 13.3 million gallons partially offset by decrease of 1.3 million gallons in diesel sold.~~


◦	~~the average cost per gallon of gasoline and diesel sold decreased $0.10 per gallon and $0.30 per gallon, respectively.~~

◦the average volumes of gasoline and diesel sold decreased by 13.9 million gallons and 9.2 million gallons, respectively.

◦the average cost per gallon of gasoline and diesel sold increased by $0.27 per gallon and $0.10 per gallon, respectively.

The following chart shows a summary of the average prices per gallon of gasoline and diesel sold in our West Texas operations for the three months ended March 31, ~~2020~~2021 and ~~2019.~~2020. Refer to the Refined Products Volume chart above for a summary of volumes impacting our West Texas operations.


4041 \|

Management's Discussion and Analysis

Operating Expenses

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

Operating expenses ~~decreased~~increased by ~~$1.9~~$0.6 million, or ~~37.1%~~18.1%, in the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019,~~2020, primarily driven by the following:

•increase in utility costs as a result of significantly higher energy costs during the February 2021 severe freezing conditions that affected most of the regions where we operate; and

•this increase partially offset by lower operating costs associated with allocated contract services pertaining to certain of our ~~assets; and~~assets.

~~decreases in variable expenses such as utilities, maintenance and materials costs.~~

~~These decreases were partially offset by:~~

~~higher employee costs allocated to us as a result of an increase in allocated employee headcount in various operational groups as the Partnership continues to experience growth.~~

Contribution Margin

~~QTD~~Q1 2021 vs. Q1 2020 ~~vs. QTD 2019~~

~~Contribution margin for the wholesale marketing and terminalling segment increased by~~•The decrease of $1.0 million, or ~~6.4%~~5.8%, in contribution margin for the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019, primarily driven by the following:~~

~~increase~~2020 was due to decreases in ~~the volumes of gasoline sold in our West Texas marketing operations as described above; and~~

~~decrease in the operating expenses as described above.~~

~~Such increases were partially offset by:~~

~~increase~~revenue netted off with decreases in cost of materials and other ~~due to higher volumes of gasoline sold~~and operating expenses as described above.


4142 \|

Management's Discussion and Analysis

Liquidity and Capital Resources

We consider the following when assessing our liquidity and capital resources:



(i) cash generated from operations;			(iii) potential issuance of additional equity; and
(ii) borrowings under our revolving credit facility;			(iv) potential issuance of additional debt securities.

At March 31, ~~2020~~2021 our total liquidity amounted to ~~$159.2~~$125.9 million, comprised of ~~$155.0~~$112.5 million in unused credit commitments under the DKL Credit Facility and ~~$4.2~~$13.4 million in cash and cash equivalents. We have the ability to increase the DKL Credit Facility to $1.0 billion subject to receiving increased or new commitments from lenders and meeting certain requirements under the credit facility. Historically, we have generated adequate cash from operations to fund ongoing working capital requirements, pay ~~minimum~~ quarterly cash distributions and operational capital expenditures, and we expect the same ~~trend~~ to continue in the foreseeable future. Other funding sources, including the issuance of additional debt securities, have been utilized to fund growth capital projects such as dropdowns. In addition, we have historically been able to source funding at rates that reflect market conditions, our financial position and our credit ratings. We continue to monitor market conditions, our financial position and our credit ratings and expect future funding sources to be at rates that are sustainable and profitable for the Partnership. However, there can be no assurances regarding the availability of any future financings or additional credit facilities or whether such financings or additional credit facilities can be made available on terms that are acceptable to us.

We believe we have sufficient financial resources from the above sources to meet our funding requirements in the next 12 months, including working capital requirements, ~~minimum~~ quarterly cash distributions and capital expenditures. Nevertheless, our ability to satisfy working capital requirements, to service our debt obligations, to fund planned capital expenditures, or to pay distributions will depend upon future operating performance, which will be affected by prevailing economic conditions in the oil industry and other financial and business factors, including the current COVID-19 Pandemic and crude oil prices, some of which are beyond our control.

Our largest customer is Delek Holdings, a related party, with whom we have various commercial agreements. Delek Holdings has initiated several steps as part of a strategic plan to navigate the current volatile markets and preserve or enhance its liquidity, including re-negotiating and extending financing arrangements, temporary suspension of growth and non-essential projects, reductions in capital and operating expenditures, divesting of non-strategic and underperforming assets, suspension of its stock repurchases and dividends, and exploring other potential financing opportunities. We believe such actions will allow Delek Holdings to continue to honor its commercial agreements with us. In addition, we eliminated the IDRs which helped lower our cost of capital and preserve our liquidity.

We continuously review our liquidity and capital resources. If market conditions were to change, for instance due to ~~the~~a significant decline in crude oil prices or uncertainty created by the COVID-19 Pandemic, and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced. Additionally, it could cause the rating agencies to lower our credit ratings. There are no ratings triggers that would accelerate the maturity of any borrowings under our debt agreements. Management continues to actively respond to the impact of the COVID-19 Pandemic to enhance our liquidity position. Such actions include reducing planned capital expenditures for 2021, seeking alternative financing solutions and enacting cost reduction measures. Refer to the Business Overview section of this MD&A for a complete discussion of the uncertainties identified by management and the actions taken to respond to the COVID-19 Pandemic.

We believe we were in compliance with the covenants in all our debt facilities as of March 31, ~~2020.~~2021. After considering the current and potential effect of the significant decline in oil prices and uncertainty created by the COVID-19 Pandemic on our operations, we currently expect to remain in compliance with our debt covenants. See Note 7 to our accompanying condensed consolidated financial statements for a complete discussion of our third-party indebtedness.

Cash Distributions

On April ~~21, 2020, we announced that the~~29, 2021, our board of directors ~~of our general partner had~~ declared a distribution of ~~$0.890~~$0.920 per common unit (the ~~"GP Distribution"~~"Distribution"), which equates to ~~$30.9~~approximately $40.0 million per quarter, based on the number of common ~~and general partner~~ units expected to be outstanding as of May ~~5, 2020.~~10, 2021. The GP Distribution is expected to be paid on May ~~12, 2020~~14, 2021 to common unitholders of record on May ~~5, 2020~~10, 2021 and represents ~~an 8.5%~~a 3.4% increase over the first quarter ~~2019~~2020 distribution. We have set a range for distribution growth guidance of ~~$0.01~~$0.005 - ~~$.015~~$0.015 per unit each quarter for ~~2020.~~2021. This increase in the distribution is consistent with our intent to maintain an attractive distribution growth profile over the long term. Although our Partnership Agreement requires that we distribute all of our available cash each quarter, we do not otherwise have a legal obligation to distribute any particular amount per common unit.


43 \|

Management's Discussion and Analysis

The table below summarizes the quarterly distributions related to our quarterly financial results:


Quarter Ended	Total Quarterly Distribution Per Limited Partner Unit		Total Quarterly Distribution Per Limited Partner Unit, Annualized		Total Cash Distribution, including general partner interest and IDRs (in thousands)		Date of Distribution	Unitholders Record Date
March 31, 2020	$	0.890	$	3.56	$	30,878	May 12, 2020	May 5, 2020
June 30, 2020	$	0.900	$	3.60	$	35,969	August 12, 2020	August 7, 2020
September 30, 2020	$	0.905	$	3.62	$	39,308	November 12, 2020	November 6, 2020
December 31, 2020	$	0.910	$	3.64	$	39,533	February 9, 2021	February 2, 2021
March 31, 2021	$	0.920	$	3.68	$	39,968	May 14, 2021 (1)	May 10, 2021

Quarter Ended Total Quarterly Distribution Per Limited Partner Unit Total Quarterly Distribution Per Limited Partner Unit, Annualized Total Cash Distribution, including general partner interest and IDRs (in thousands) Date of Distribution Unitholders Record Date
March 31, 2019 $ 0.820
$ 3.28
$ 27,438
May 14, 2019 May 7, 2019
June 30, 2019 $ 0.850
$ 3.40
$ 28,914
August 13, 2019 August 5, 2019
September 30, 2019 $ 0.880
$ 3.52
$ 30,379
November 12, 2019 November 4, 2019
December 31, 2019 $ 0.885
$ 3.54
$ 30,634
February 12, 2020 February 4, 2020
March 31, 2020 $ 0.890
$ 3.56
$ 30,878

May 12, 2020 ⁽¹⁾
May 5, 2020
(1)Expected date of distribution.


⁽¹⁾			~~Expected date of distribution.~~



~~42 \|~~

~~Management's Discussion and Analysis~~

Cash Flows

The following table sets forth a summary of our consolidated cash flows for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Three Months Ended March 31,
	2021		2020
Net cash provided by operating activities	$	61,732	$	34,834
Net cash used in investing activities	(3,965)		(112,176)
Net cash (used in) provided by financing activities	(48,633)		75,973
Net increase in cash and cash equivalents	$	9,134	$	(1,369)

Three Months Ended March 31,
2020 2019
Net cash provided by operating activities $ 34,834
$ 27,017
Net cash used in investing activities (112,176 ) (3,766 )
Net cash provided by (used in) financing activities 75,973
(22,417 )
Net (decrease) increase in cash and cash equivalents $ (1,369 ) $ 834

Operating Activities

Net cash provided by operating activities was $61.7 million for the three months ended March 31, 2021, compared to $34.8 million for the three months ended March 31, 2020, ~~compared to $27.0 million for the three months ended March 31, 2019,~~ resulting in a ~~$7.8~~$26.9 million increase in net cash provided by operating activities. The cash receipts from ~~customers~~customer activities ~~increased~~decreased by ~~$11.6~~$8.0 million and cash payments to suppliers and for allocations from Delek Holdings for salaries ~~increased~~decreased by ~~$6.4~~$34.1 million. In addition, cash dividends received from equity method investments ~~increased~~decreased by ~~$3.4 million. The cash inflows were netted with the increase in~~$1.2 million and cash paid for debt interest ~~which increased~~decreased by ~~$0.9~~$2.0 million.

Investing Activities

Net cash used in investing activities ~~increased $108.4~~decreased by $108.2 million during the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019.~~2020. The ~~increase~~decrease in cash used in investing activities was primarily due to ~~the acquisition of the Big Spring Gathering Assets. The Big Spring Gathering Assets Acquisition was partially financed with cash amounting~~lower contributions to ~~$100.0 million. There was~~equity method investments and no ~~asset acquisition~~acquisitions during the three months ended March 31, ~~2019. In addition, we~~2021 compared to the three months ended March 31, 2020. We disbursed ~~$8.2~~$1.4 million in additional contributions to our equity method investments during the three months ended March 31, ~~2020~~2021 compared to ~~$3.4~~$8.2 million during the three months ended March 31, ~~2019.~~2020.The Big Spring Gathering Assets Acquisition, effective on March 31, 2020, was partially financed with cash from drawdown of the DKL Credit Facility amounting to $100.0 million which was recorded in investing activities. Transaction costs paid amounting to $1.0 million were capitalized for the Big Spring Gathering Assets Acquisition. There was no asset acquisition during the three months ended March 31, 2021. In addition there were additions to property, plant and equipment amounting to $6.1 million and distributions from equity method investments amounting $3.9 million during the three months ended March 31, 2021 compared to additions to property, plant and equipment amounting to $4.2 million and distributions from equity method investments amounting to $0.1 million during the three months ended March 31, 2020.

Financing Activities

Net cash provided by financing activities ~~increased $98.4~~decreased $124.6 million during the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019.~~2020. The ~~increase~~decrease in cash provided by financing activities was primarily due to ~~an increase~~the decrease in net proceeds under the revolving credit facility (defined below). We ~~received~~repaid $9.1 million under the revolving credit facility during the three months ended March 31, 2021, compared to net proceeds of $106.6 million under the revolving credit facility during the three months ended March 31, ~~2020, compared to net proceeds of $4.5~~2020. In addition, we paid quarterly cash distributions totaling $39.5 million ~~under the revolving credit facility~~ during the three months ended March 31, ~~2019. This increase in net proceeds under our revolving credit facility was partially offset primarily by increases in distributions. We paid~~2021, compared to quarterly cash distributions totaling $30.6 million during the three months ended March 31, ~~2020, compared to quarterly cash distributions totaling $26.9 million during the three months ended March 31, 2019.~~2020.


44 \|

Management's Discussion and Analysis

The sources of cash during the ~~quarter~~three months ended March 31, 2020 primarily consisted of the $100.0 million drawdown under the DKL Credit Facility to part-finance the Big Spring Gathering Assets Acquisition. The ~~acquisition~~Big Spring Gathering Assets Acquisition was also financed by the issuance of 5.0 million units to Delek US Energy, Inc. (a wholly owned subsidiary of Delek ~~US Holdings, Inc.)~~Holdings).

Debt Overview

As of March 31, ~~2020,~~2021, we had total indebtedness of ~~$940.0~~$983.4 million comprised of ~~$695.0~~$737.5 million under the amended and restated senior secured revolving agreement (the "DKL Credit Facility") and ~~$245.0~~$245.9 million of 6.75% senior notes due 2025 (the “2025 Notes”), the latter net of deferred financing costs and original issue discount. Deferred financing costs and original issue discount on the 2025 Notes amounted to ~~$3.8~~$3.1 million and ~~$1.2~~$1.0 million, respectively. The ~~increase~~decrease of ~~$106.8~~$8.9 million in our long-term debt balance compared to the balance at December 31, ~~2019~~2020 resulted from the ~~borrowings~~payments under the DKL Credit Facility during the three months ended March 31, ~~2020 to finance the Big Spring Gathering Assets Acquisition and~~2021 partially offset by amortization of the deferred financing costs and original issuance discount under our 2025 Notes. As of March 31, ~~2020,~~2021, our total indebtedness consisted of:

•An aggregate principal amount of ~~$695.0~~$737.5 million under the ~~Delek Logistics~~DKL Credit Facility ("revolving credit facility"), due on September 28, 2023, with an average borrowing rate of ~~3.7%~~2.45%.

Delek Marketing & Supply, LLC, a subsidiary of Delek Holdings ("Delek Marketing"), had provided a limited guaranty of the Partnership's obligations under the DKL Credit Facility. Delek Marketing's guaranty was (i) limited to an amount equal to the principal amount, plus unpaid and accrued interest, of a promissory note made by Delek Holdings in favor of Delek Marketing (the "Holdings Note") and (ii) was secured by Delek Marketing's pledge of the Holdings Note to the lenders under the DKL Credit Facility. Effective March 30, 2020, Delek Marketing's limited guaranty and pledge of the Holdings Note was terminated pursuant to a guaranty and pledge release approved by the required lenders under the DKL Credit Facility.



~~43 \|~~ •

~~Management's Discussion and Analysis~~

An aggregate principal amount of ~~$245.0~~$245.9 million, under the ~~Delek Logistics~~2025 Notes (6.75% senior notes), due in 2025, with an effective interest rate of ~~7.23%~~7.25%.

We believe we were in compliance with the covenants in all our debt facilities as of March 31, ~~2020.~~2021. See Note 7 to our accompanying condensed consolidated financial statements for a complete discussion of our third-party indebtedness.

Agreements Governing Certain Indebtedness of Delek Holdings

Although we are not contractually bound by and are not liable for Delek Holdings' debt under its credit arrangements, we are indirectly affected by certain prohibitions and limitations contained therein. Specifically, certain of Delek Holdings' credit arrangements require that Delek Holdings meet certain minimum covenant levels for (i) consolidated shareholders’ equity and (ii) a ratio of consolidated shareholders' equity to adjusted total assets. Delek Holdings, due to its majority ownership and control of our general partner, has the ability to prevent us from taking actions that would cause Delek Holdings to violate these and any other covenants in its credit arrangements or otherwise be in default under any of its credit arrangements. As a result we cannot assure you that such covenants will not impact our ability to use the full capacity under our revolving credit facility in the future. Delek Holdings' level of indebtedness, the terms of its borrowings and any future credit ratings could adversely affect our ability to grow our business, our ability to make cash distributions to our unitholders and our credit profile. Our current and future credit ratings may also be affected by Delek Holdings' level of indebtedness, financial performance and credit ratings.

Equity Units Overview

On August 13, 2020, we closed the IDR Restructuring Transaction. To effect this transaction, our partnership agreement was amended and restated. See Note 3 to our accompanying condensed consolidated financial statements for additional details.

In August 2020, we filed a shelf registration statement, which subsequently became effective, with the SEC for the proposed re-sale or disposition from time to time by Delek Holdings of up to 14.0 million common limited partner units representing limited partner interests in the Partnership. We will not sell any securities under this shelf registration statement and we will not receive any proceeds from the sale of the securities by Delek Holdings.

On March 31, 2020, we issued 5.0 million units to Delek Holdings as part of the consideration for the Big Spring Gathering Assets Acquisition. In connection with the issuance of these units and in accordance with the Partnership Agreement, we issued additional general partner units in an amount necessary to maintain the ~~2.0%~~2% general partner interest as defined in the Partnership Agreement.

Contemporaneous with the above issuance, the Board of the general partner ~~adopted Amendment No. 2 (“Amendment No. 2”) to the Partnership Agreement, effective upon adoption. Amendment No. 2 provides for a waiver of~~waived distributions in respect of the IDRs associated with the 5.0 million Additional Units for at least two years, through at least the distribution for the quarter ending March 31, 2022 ("IDR Waiver"). The IDR Waiver essentially ~~reduces~~reduced the distribution made to the holders of the IDRs during this period, as the holders would not receive a share of the distribution made on the Additional Units. The IDR Waiver will automatically and permanently expire if, following the payment of a distribution in respect of a quarter ending on or after March 31, 2022, Delek Logistics has generated distributable cash flow in the most recent four consecutive quarters that, in the aggregate, would have resulted in total distribution coverage (on a pro forma basis without giving effect to the IDR Waiver) of at least 110% or 1.1x over such period. The IDR Waiver remains effective if this condition is not met. Following the termination of the IDR Waiver, the holders of the IDRs will receive distributions on all units, including the Additional Units. In addition, pursuant to Amendment No. 2, in connection with any sale or exchange of the IDRs to or with the Partnership, the IDRs shall be treated as if such waiver had not and never will expire, regardless of whether such waiver has actually expired. An additional waiver letter ~~has been~~was signed that ~~waives~~waived all of the distributions for the first quarter of 2020 on the Additional Units with respect to base distributions and the IDRs. The IDR Restructuring Transaction on August 13, 2020 permanently eliminated all of the IDRs. See Note 3 to our accompanying condensed consolidated financial statements for additional details.


45 \|

Management's Discussion and Analysis

Capital Spending

A key component of our long-term strategy is our capital expenditure program. The following table summarizes our actual capital expenditures for the three months ended March 31, ~~2020~~2021 and planned capital expenditures for the full year ~~2020~~2021 by segment and by major category (in thousands):


	Full Year 2021 Forecast		Three Months Ended March 31, 2021
Pipelines and Transportation
Regulatory (2)	$	4,839	$	443
Maintenance (1)	2,221		34
Discretionary projects (2)	9,670		5,368
Pipelines and transportation segment total	$	16,730	$	5,845

Wholesale Marketing and Terminalling
Regulatory (3)	$	3,559	$	37
Maintenance (1)	2,480		2
Discretionary (3)	5,026		1,915
Wholesale marketing and terminalling segment total	$	11,065	$	1,954




Total capital spending	$	27,795	$	7,799

Full Year 2020 Forecast Three Months Ended March 31, 2020
Pipelines and Transportation
Regulatory ⁽²⁾
$ 1,359
$ 197
Maintenance ^{(1) (2)}
3,204
252
Discretionary projects ⁽²⁾
9,988
(4 )
Pipelines and transportation segment total $ 14,551
$ 445

Wholesale Marketing and Terminalling
Regulatory ⁽³⁾
$ 849
$ 719
Maintenance ^{(1) (3)}
476
411
Discretionary ⁽³⁾
1,700
1,453
Wholesale marketing and terminalling segment total $ 3,025
$ 2,583

Total capital spending ⁽⁴⁾
$ 17,576
$ 3,028
(1)Maintenance capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines, tanks and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations. Delek Holdings has agreed to reimburse us with respect to certain assets it has transferred to us pursuant to the terms of the Omnibus Agreement (as defined in Note 3 to our accompanying condensed consolidated financial statements).

(2)The majority of the $4.8 million budgeted for regulatory projects in the pipelines and transportation segment is expected to be spent on certain of our pipelines to maintain their operational integrity. The majority of the $9.7 million for discretionary projects in the pipelines and transportation segment is expected to be spent on scheduled maintenance and improvements to certain of our tanks and development of our DPG assets. These expenditures have historically been and will continue to be financed through cash generated from operations.

(3)The majority of the $3.6 million and $5.0 million budgeted for regulatory and discretionary projects in the wholesale marketing and terminalling segment relates to scheduled maintenance and improvements on our terminalling tanks and racks at certain of our terminals. These expenditures have historically been and will continue to be financed through cash generated from operations.



~~44 \|~~

~~Management's Discussion and Analysis~~

⁽¹⁾

Maintenance capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines, tanks and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations. Delek Holdings has agreed to reimburse us with respect to certain assets it has transferred to us pursuant to the terms of the Omnibus Agreement (as defined in Note 3 to our accompanying condensed consolidated financial statements).

⁽²⁾

The majority of the $3.2 million and $10.0 million budgeted for maintenance and discretionary projects in the pipelines and transportation segment is expected to be spent on scheduled maintenance and improvements to certain of our tanks and pipelines and developments to the Big Spring Gathering Assets, respectively. Effective March 31, 2020, the pipelines and transportation segments includes the Big Spring Gathering Assets acquired in the Big Spring Gathering Assets Acquisition. See Note 2 to our accompanying condensed consolidated financial statements for further information.


⁽³⁾	~~The majority of the $0.8 million and~~$1.7 million budgeted for regulatory and discretionary projects in the wholesale marketing and terminalling segment relates to improvements to our terminalling facilities at the Tyler Refinery and developments on the Big Spring Refinery to Magellan Pipeline, respectively.


⁽⁴⁾	We decreased our capital spending forecast for 2020 to $17.6 million, down from the prior forecast of $22.7 million. We decreased our forecast as a result of changing circumstances associated with COVID-19 and OPEC Production Disputes.

The amount of our capital expenditure budget is subject to change due to unanticipated increases in the cost, scope and completion time for our capital projects. For example, we may experience increases in the cost of and/or timing to obtain necessary equipment required for our continued compliance with government regulations or to complete improvement projects. Additionally, the scope and cost of employee or contractor labor expense related to installation of that equipment could increase from our projections.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements through the date of the filing of this Quarterly Report on Form 10-Q.



4546 \|

Management's Discussion and Analysis

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Impact of Changing Prices

Our revenues and cash flows, as well as estimates of future cash flows, are sensitive to changes in commodity prices. Shifts in the cost of crude oil, the prices of refined products and the cost of ethanol can generate changes in the operating margin in our wholesale marketing and terminalling segment.

Interest Rate Risk

Debt that we incur under the DKL Credit Facility bears interest at floating rates and will expose us to interest rate risk. The annualized impact of a hypothetical one percent change in interest rates on our floating rate debt outstanding as of March 31, ~~2020~~2021 would be to change interest expense by approximately ~~$7.0~~$7.4 million.

LIBOR Transition

LIBOR is a commonly used indicative measure of the average interest rate at which major global banks could borrow from one another. The United ~~Kingdom's~~Kingdom’s Financial Conduct Authority, which regulates LIBOR, has publicly announced that it intends to discontinue the reporting of certain LIBOR rates after ~~2021.~~2021, with a complete cessation for all USD LIBOR rates after June 2023. Certain of our agreements use LIBOR as a ~~"benchmark"~~“benchmark” or ~~"reference rate"~~“reference rate” for various terms. Some agreements contain an existing LIBOR alternative. Where there is not an alternative, we expect to replace the LIBOR benchmark with an alternative reference rate. While we do not expect the transition to an alternative rate to have a significant impact on our business or operations, it is possible that the move away from LIBOR could materially impact our borrowing costs on our variable rate indebtedness.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance that the information that we are required to disclose in reports we file under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the "Exchange Act")~~ is accumulated and appropriately communicated to management. We carried out an evaluation required by Rule 13a-15(b) of the Exchange Act, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures at the end of the reporting period. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the reporting period.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the first quarter of ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Although most of our corporate employees have shifted to a remote working environment due to the COVID-19 Pandemic, we have not experienced a material impact to our internal control over financial reporting. We are continually monitoring and assessing the COVID-19 Pandemic to minimize the impact on the design and operating effectiveness of our internal controls.



4647 \|

Other Information

~~Legal Proceedings and Risk Factors~~

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including, environmental claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal proceeding or proceedings to which we are a party will have a material adverse effect on our business, financial condition or results of operations. See Note 13 to our accompanying condensed consolidated financial statements, which is incorporated by reference in this Item 1, for additional information.

On October 3, 2019, a release of diesel fuel involving one of our pipelines occurred near Sulphur Springs, Texas (the "Sulphur Springs Release"). Cleanup operations and site maintenance and remediation on this release have been substantially completed where such costs incurred totaled $7.1 million during 2019. During the first quarter of 2020, we incurred approximately $0.2 million of additional costs related to final clean-up of this release. The release is currently in boom maintenance. Ground water wells for monitoring activities are expected to be installed in May 2020. We expect the monitoring period to last for at least a year. We have filed suit in January 2020 against a third party contractor, seeking damages related to this release. We have not received notification that any legal action with respect to fines and penalties will be pursued by the regulatory agencies.

ITEM 1A. RISK FACTORS

There were no material changes during the first quarter of ~~2020~~2021 to the risk factors identified in the Partnership’s fiscal ~~2019~~2020 Annual Report on Form ~~10-K, except as noted below.~~10-K.

The current COVID-19 Pandemic and certain developments in the global oil markets have had, and may continue to have, an adverse impact on our business, our future results of operations and our overall financial performance.

The COVID-19 Pandemic could materially adversely affect our business and operations during 2020 and possibly beyond. In early 2020, global health care systems and economies began to experience strain from the spread of the COVID-19 coronavirus. As the virus spread, global economic activity began to slow and future economic activity was forecast to slow with a resulting forecast of a decline in oil and gas demand. The global pandemic has resulted in a dramatic reduction in airline flights and has reduced the number of cars on the road. In response to the decline in demand, OPEC participating countries have agreed to adjust downwards their overall production of crude oil through April 30, 2022, with the agreement to be reassessed in December 2021. These declines have been exacerbated by a production dispute between Russia and the members of OPEC, particularly Saudi Arabia, and the subsequent actions taken by such countries as a result thereof.

Global economic growth drives demand for energy from all sources, including fossil fuels. Should the U.S. and global economies experience weakness, demand for energy may decline. Similarly, should growth in global energy production outstrip demand, excess supplies may arise. Declines in demand and excess supplies may result in accompanying declines in commodity prices and deterioration of our financial position along with our ability to operate profitably and our ability to obtain financing to support operations. With respect to our business, we have experienced periodic declines in demand thought to be associated with slowing economic growth in certain markets, including the effects of the COVID-19 Pandemic, coupled with new oil and gas supplies coming on line and other circumstances beyond our control that resulted in oil and gas supply exceeding global demand which, in turn, resulted in steep declines in prices of oil and natural gas. There can be no assurance as to how long the current price decline will persist or that a reoccurrence of price weakness will not arise in the future.

The ultimate extent of the impact of the COVID-19 Pandemic on our business, financial condition, results of operations and liquidity will depend largely on future developments, including the duration and spread of the virus outbreak, particularly within the geographic areas where we operate, and the related impact on overall economic activity, all of which are uncertain and cannot be predicted with certainty at this time. The ultimate extent of the impact of the volatile conditions in the oil and gas industry on our business, financial condition, results of operation and liquidity will also depend largely on future developments, including the extent and duration of any price reductions, any additional decisions by OPEC and the lack of resolution of disputes between Russia and the members of OPEC.

To the extent the COVID-19 Pandemic and the developments in the global oil markets adversely affects our business, financial condition, results of operation and liquidity, they may also have the effect of heightening many of the other risks described in the “Risk Factors” section included in our Annual Report on Form 10-K for the year ended December 31, 2019 and in this Quarterly Report on Form 10-Q, as those risk factors are amended or supplemented by subsequent Quarterly Reports on Form 10-Q and other reports and documents we file with the SEC after the date hereof.



~~47 \|~~

~~Exhibits~~

ITEM 6. EXHIBITS


Exhibit No.				Description


~~Exhibit No.~~			~~Description~~




























~~2.1~~31.1		~#		Contribution, Conveyance and Assumption Agreement, dated as of March 31, 2020, by and among Delek Big Spring South Mainline, LLC, Delek Permian Gathering, LLC, Delek Big Spring North Gathering, LLC, Delek Big Spring Gathering, LLC, DKL Permian Gathering, LLC, Delek Logistics Partners, LP and Delek US Holdings, Inc. (incorporated by reference to Exhibit 2.1 of the Partnership’s Form 8-K filed on April 6, 2020).
~~3.1~~		Amendment No. 2 to the First Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP, dated March 31, 2020 (incorporated by reference to Exhibit 3.1 of the Partnership’s Form 8-K filed on April 6, 2020).
~~4.1~~		Second Supplemental Indenture, dated February 28, 2020, among DKL Pipeline, LLC, Delek Logistics Partners, LP, Delek Logistics Finance Corp., the other guarantors and U.S. Bank, National Association (incorporated by reference to Exhibit 4.1 of the Partnership’s Form 8-K filed on April 6, 2020).
~~4.2~~		Third Supplemental Indenture, dated March 26, 2020, among DKL Permian Gathering, LLC, Delek Logistics Partners, LP, Delek Logistics Finance Corp., the other guarantors and U.S. Bank, National Association (incorporated by reference to Exhibit 4.2 of the Partnership’s Form 8-K filed on April 6, 2020).
~~10.1~~	~	Throughput and Deficiency Agreement, dated and effective as of March 31, 2020, by and between Lion Oil Trading & Transportation, LLC and DKL Permian Gathering, LLC (incorporated by reference to Exhibit 10.1 of the Partnership’s Form 8-K filed on April 6, 2020).
~~10.2~~		Second Amendment and Restatement of Schedules to Third Amended and Restated Omnibus Agreement, dated and effective as of March 31, 2020 (incorporated by reference to Exhibit 10.2 of the Partnership’s Form 8-K filed on April 6, 2020).
~~31.1~~	#	Certification of Delek Logistics GP, LLC's Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended.
31.2		#		Certification of Delek Logistics GP, LLC's Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a) under the Securities Exchange Act of 1934, as amended.
32.1		##		Certification of Delek Logistics GP, LLC's Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		##		Certification of Delek Logistics GP, LLC's Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101				The following materials from Delek Logistics Partners, LP's Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2020,~~2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of March 31, ~~2020~~2021 and December 31, ~~2019~~2020 (Unaudited), (ii) Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited), (iii) Condensed Consolidated Statement of Partners' Equity (Deficit) for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited), (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (Unaudited), and (v) Notes to Condensed Consolidated Financial Statements (Unaudited).
104				The cover page from Delek Logistics Partners, LP's Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2020,~~2021, has been formatted in Inline XBRL.


#		Filed herewith
##		Furnished herewith

#	~~Filed herewith~~
##	~~Furnished herewith~~
~	~~Certain information contained in these exhibits has been omitted because it is not material and would likely cause competitive harm to the Partnership if publicly disclosed.~~



48 \|

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Delek Logistics Partners, LP
By:		Delek Logistics GP, LLC
		Its General Partner

~~Delek Logistics Partners, LP~~
By:	~~Delek Logistics GP, LLC~~
	~~Its General Partner~~

~~By:~~	/s/ Ezra Uzi Yemin
		Ezra Uzi Yemin
		Chairman and Chief Executive Officer (Principal Executive Officer)

By:		/s/ ~~Assaf Ginzburg~~Reuven Spiegel
		~~Assaf Ginzburg~~Reuven Spiegel
		Executive Vice President and Chief Financial Officer ~~(Principal~~ (Principal Financial ~~and Accounting~~ Officer)

Dated: May ~~8, 2020~~

6, 2021



49 \|



Delaware			45-5379027
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

7102 Commerce Way	Brentwood	Tennessee	37027
(Address of principal executive offices)			(Zip Code)


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	13,377	$	4,243
Accounts receivable	12,322		15,676
Accounts receivable from related parties	0		5,932
Inventory	1,867		3,127

Other current assets	525		331
Total current assets	28,091		29,309
Property, plant and equipment:
Property, plant and equipment	699,552		692,282
Less: accumulated depreciation	(237,495)		(227,470)
Property, plant and equipment, net	462,057		464,812
Equity method investments	251,448		253,675
Operating lease right-of-use assets	24,804		24,199
Goodwill	12,203		12,203
Marketing Contract Intangible, net	121,985		123,788
Rights-of-way	36,791		36,316
Other non-current assets	11,491		12,115
Total assets	$	948,870	$	956,417
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable	$	4,155	$	6,659
Accounts payable to related parties	4,546		0

Interest payable	6,627		2,452
Excise and other taxes payable	3,637		4,969
Current portion of operating lease liabilities	8,446		8,691
Accrued expenses and other current liabilities	5,355		5,529
Total current liabilities	32,766		28,300
Non-current liabilities:
Long-term debt	983,436		992,291

Asset retirement obligations	6,130		6,015
Deferred tax liabilities	681		616
Operating lease liabilities, net of current portion	16,292		15,418
Other non-current liabilities	20,955		22,078
Total non-current liabilities	1,027,494		1,036,418
Equity (Deficit):
Common unitholders - public; 8,697,468 units issued and outstanding at March 31, 2021 (8,697,468 at December 31, 2020)	164,100		164,614
Common unitholders - Delek Holdings; 34,745,868 units issued and outstanding at March 31, 2021 (34,745,868 at December 31, 2020)	(275,490)		(272,915)
Total deficit	(111,390)		(108,301)
Total liabilities and deficit	$	948,870	$	956,417



	March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	4,176		$	5,545
Accounts receivable	12,392			13,204
Inventory	5,133			12,617
Other current assets	926			2,204
Total current assets	22,627			33,570
Property, plant and equipment:
Property, plant and equipment	665,718			461,325
Less: accumulated depreciation	(186,249		)	(166,281		)
Property, plant and equipment, net	479,469			295,044
Equity method investments	255,743			246,984
Operating lease right-of-use assets	3,471			3,745
Goodwill	12,203			12,203
Marketing Contract Intangible, net	129,196			130,999
Rights-of-way	37,329			15,597
Other non-current assets	6,198			6,305
Total assets	$	946,236		$	744,447
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable	$	4,385		$	12,471
Accounts payable to related parties	2,075			8,898
Interest payable	6,919			2,572
Excise and other taxes payable	4,088			3,941
Current portion of operating lease liabilities	1,456			1,435
Accrued expenses and other current liabilities	3,719			5,765
Total current liabilities	22,642			35,082
Non-current liabilities:
Long-term debt	939,955			833,110
Asset retirement obligations	5,695			5,588
Deferred tax liabilities	1,027			215
Operating lease liabilities, net of current portion	2,015			2,310
Other non-current liabilities	19,298			19,261
Total non-current liabilities	967,990			860,484
Equity (Deficit):
Common unitholders - public; 8,679,757 units issued and outstanding at March 31, 2020 (9,131,579 at December 31, 2019)	158,332			164,436
Common unitholders - Delek Holdings; 20,745,868 units issued and outstanding at March 31, 2020 (15,294,046 at December 31, 2019)	(199,943		)	(310,513		)
General partner - 600,523 units issued and outstanding at March 31, 2020 (498,482 at December 31, 2019)	(2,785		)	(5,042		)
Total deficit	(44,396		)	(151,119		)
Total liabilities and deficit	$	946,236		$	744,447


	Three months ended
	March 31,
		2021		2020
Net revenues:
Affiliates (1)		$	96,194	$	106,699
Third party		56,719		56,702
Net revenues		152,913		163,401
Cost of sales:
Cost of materials and other		81,171		101,293
Operating expenses (excluding depreciation and amortization presented below)		13,495		13,954
Depreciation and amortization		10,247		5,803
Total cost of sales		104,913		121,050
Operating expenses related to wholesale business (excluding depreciation and amortization presented below)		561		790
General and administrative expenses		4,860		6,130
Depreciation and amortization		492		496
Other operating income, net		(83)		(107)
Total operating costs and expenses		110,743		128,359
Operating income		42,170		35,042
Interest expense, net		9,737		11,824
Income from equity method investments		(4,049)		(5,553)
Other expense, net		31		0
Total non-operating expenses, net		5,719		6,271
Income before income tax expense		36,451		28,771
Income tax expense		184		975


Net income attributable to partners		$	36,267	$	27,796
Comprehensive income attributable to partners		$	36,267	$	27,796

Less: General partner's interest in net income, including incentive distribution rights (2)		0		9,077
Limited partners' interest in net income		$	36,267	$	18,719

Net income per limited partner unit:
Common units - basic		$	0.83	$	0.76
Common units - diluted		$	0.83	$	0.76

Weighted average limited partner units outstanding:
Common units - basic		43,443,336		24,480,570
Common units - diluted		43,449,059		24,485,336

Cash distributions per limited partner unit		$	0.920	$	0.890



	Three months ended
	March 31,
	2020			2019
Net revenues:
Affiliates ⁽¹⁾	$	106,699		$	62,965
Third party	56,702			89,518
Net revenues	163,401			152,483
Cost of sales:
Cost of materials and other	101,293			96,265
Operating expenses (excluding depreciation and amortization presented below)	13,954			15,307
Depreciation and amortization	5,803			6,124
Total cost of sales	121,050			117,696
Operating expenses related to wholesale business (excluding depreciation and amortization presented below)	790			751
General and administrative expenses	6,130			4,473
Depreciation and amortization	496			450
Other operating (income) expense, net	(107		)	2
Total operating costs and expenses	128,359			123,372
Operating income	35,042			29,111
Interest expense, net	11,824			11,301
Income from equity method investments	(5,553		)	(1,951		)
Total non-operating expenses, net	6,271			9,350
Income before income tax expense	28,771			19,761
Income tax expense	975			65
Net income attributable to partners	$	27,796		$	19,696
Comprehensive income attributable to partners	$	27,796		$	19,696

Less: General partner's interest in net income, including incentive distribution rights	9,077			7,270
Limited partners' interest in net income	$	18,719		$	12,426

Net income per limited partner unit:
Common units - basic	$	0.76		$	0.51
Common units - diluted	$	0.76		$	0.51

Weighted average limited partner units outstanding:
Common units - basic	24,480,570			24,407,168
Common units - diluted	24,485,336			24,416,058

Cash distributions per limited partner unit	$	0.890		$	0.820



☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

						For the transition period from to


PART I. FINANCIAL INFORMATION				PART II. OTHER INFORMATION

3	Item 1. Financial Statements (unaudited)			48	Item 1. Legal Proceedings
	3	Condensed Consolidated Balance Sheets
	4	Condensed Consolidated Statements of Income and Comprehensive Income		48	Item 1A. Risk Factors
	6	Condensed Consolidated Statements of Partner's Equity (Deficit)
	5	Condensed Consolidated Statements of Cash Flows		48	Item 6. Exhibits
	7	Notes to Condensed Consolidated Financial Statements
		7	Note 1 - Organization and Basis of Presentation	49	Signatures
		8	Note 2 - Acquisitions
		9	Note 3 - Related Party Transactions
		11	Note 4 - Revenues
		13	Note 5 - Net Income Per Unit
		14	Note 6 - Inventory
		14	Note 7 - Long-Term Obligations
		15	Note 8 - Equity
		17	Note 9 - Equity Based Compensation
		17	Note 10 - Equity Method Investments
		19	Note 11 - Segments


		20	Note 12 - Income Taxes
		20	Note 13 - Commitments and Contingencies
		21	Note 14 - Leases
		22	Note 15 - Subsequent Events

23	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	33	Summary of Financial and Other Information
	35	Results of Operations
		35	Consolidated
		38	Pipelines and Transportation
		40	Wholesale Marketing and Terminalling
	43	Liquidity and Capital Resources

47	Item 3. Quantitative and Qualitative Disclosures about Market Risk

47	Item 4. Controls and Procedures


⁽¹⁾ (1)See Note 3 for a description of our material affiliate revenue transactions. (2)See Note 3 for a description of the IDR Restructuring Transaction.	~~See Note 3 for a description of our material affiliate revenue transactions.~~


	Common - Public		Common - Delek Holdings		Total
Balance at December 31, 2020	$	164,614	$	(272,915)	$	(108,301)
Cash distributions	(7,914)		(31,619)		(39,533)
Net income attributable to partners	7,261		29,006		36,267
Other	139		38		177
Balance at March 31, 2021	$	164,100	$	(275,490)	$	(111,390)



	Common - Public			Common - Delek Holdings			General Partner			Total
Balance at December 31, 2019	$	164,436		$	(310,513	)	$	(5,042	)	$	(151,119	)
Cash distributions	(8,081		)	(13,535		)	(9,017		)	(30,633		)
General partner units issued to maintain 2% interest	—			—			6			6
Net income attributable to partners	6,652			12,067			9,077			27,796
Delek Holdings Unit purchases	(4,979		)	4,979			—			—
Issuance of units in connection with the Big Spring Gathering Assets Acquisition	—			107,323			2,190			109,513
Other	304			(264		)	1			41
Balance at March 31, 2020	$	158,332		$	(199,943	)	$	(2,785	)	$	(44,396	)



	Common - Public			Common - Delek Holdings			General Partner			Total
Balance at December 31, 2018	$	171,023		$	(299,360	)	$	(6,486	)	(134,823		)
Cash distributions ⁽¹⁾	(7,352		)	(12,388		)	(7,179		)	(26,919		)
General partner units issued to maintain 2% interest	—			—			2			2
Net income attributable to partners	4,664			7,762			7,270			19,696
Other	54			84			1			139
Balance at March 31, 2019	$	168,389		$	(303,902	)	$	(6,392	)	$	(141,905	)



	Three Months Ended March 31, 2020
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	9,465	$	191	$	9,656
Product Revenue - Third Party	—		47,046		47,046
Product Revenue - Affiliate	—		51,503		51,503
Lease Revenue - Affiliate ⁽¹⁾	38,502		16,694		55,196
Total Revenue	$	47,967	$	115,434	$	163,401



	Three Months Ended March 31, 2019
	Pipelines and Transportation		Wholesale Marketing and Terminalling		Consolidated
Service Revenue - Third Party	$	3,974	$	120	$	4,094
Product Revenue - Third Party	—		85,424		85,424
Product Revenue - Affiliate	—		9,386		9,386
Lease Revenue - Affiliate ⁽¹⁾	36,659		16,920		53,579
Total Revenue	$	40,633	$	111,850	$	152,483


Remainder of 2021	202,154
2022	250,145
2023	241,631
2024	166,697
2025 and thereafter	$	618,965
Total expected revenue on remaining performance obligations	$	1,479,592



Remainder of 2020	157,039
2021	209,150
2022	208,095
2023	202,287
2024 and thereafter	$	504,649
Total expected revenue on remaining performance obligations	$	1,281,220



~~8 \|~~



~~9 \|~~



~~10 \|~~



~~11 \|~~


Quarter Ended	Total Quarterly Distribution Per Limited Partner Unit		Total Cash Distribution (in thousands)		Date of Distribution	Unitholders Record Date
March 31, 2020	$	0.890	$	30,878	May 12, 2020	May 5, 2020
June 30, 2020	$	0.900	$	35,969	August 12, 2020	August 7, 2020
September 30, 2020	$	0.905	$	39,308	November 12, 2020	November 6, 2020
December 31, 2020	$	0.910	$	39,533	February 9, 2021	February 2, 2021
March 31, 2021	$	0.920	$	39,968	May 14, 2021 (1)	May 10, 2021


	March 31, 2021		December 31, 2020
Current Assets	$	8,441	$	13,488
Non-current Assets	$	410,772	$	413,259
Current liabilities	$	10,093	$	7,789


(in thousands)	Three Months Ended March 31,
		2021		2020
Pipelines and Transportation
Net revenues:
Affiliate		$	63,048	$	38,502
Third party		1,927		9,465
Total pipelines and transportation		64,975		47,967

Cost of materials and other		13,079		6,098
Operating expenses (excluding depreciation and amortization)		10,172		11,456
Segment contribution margin		$	41,724	$	30,413







Capital spending		$	5,845	$	445

Wholesale Marketing and Terminalling
Net revenues:
Affiliate (1)		$	33,146	$	68,197
Third party		54,792		47,237
Total wholesale marketing and terminalling		87,938		115,434

Cost of materials and other		68,092		95,195
Operating expenses (excluding depreciation and amortization)		3,884		3,288
Segment contribution margin		$	15,962	$	16,951







Capital spending		$	1,954	$	2,583

Consolidated
Net revenues:
Affiliate		$	96,194	$	106,699
Third party		56,719		56,702
Total Consolidated		152,913		163,401

Cost of materials and other		81,171		101,293
Operating expenses (excluding depreciation and amortization presented below)		14,056		14,744
Contribution margin		57,686		47,364



General and administrative expenses		4,860		6,130
Depreciation and amortization		10,739		6,299
Other operating income, net		(83)		(107)
Operating income		$	42,170	$	35,042
Capital spending		$	7,799	$	3,028



(1)			For a definition of EBITDA and distributable cash flow, please see "Non-GAAP Measures" above.
(2)			Maintenance and regulatory capital expenditures represent cash expenditures (including expenditures for the addition or improvement to, or the replacement of, our capital assets, and for the acquisition of existing, or the construction or development of new, capital assets) made to maintain our long-term operating income or operating capacity. Examples of maintenance and regulatory capital expenditures are expenditures for the repair, refurbishment and replacement of pipelines and terminals, to maintain equipment reliability, integrity and safety and to address environmental laws and regulations.
(3)			For the three month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, Delek Holdings reimbursed us for certain capital expenditures pursuant to the terms of the Omnibus Agreement (as defined in Note 3 to our accompanying condensed consolidated financial statements).



	Full Year 2020 Forecast		Three Months Ended March 31, 2020
Pipelines and Transportation
Regulatory ⁽²⁾	$	1,359	$	197
Maintenance ^{(1) (2)}	3,204		252
Discretionary projects ⁽²⁾	9,988		(4		)
Pipelines and transportation segment total	$	14,551	$	445

Wholesale Marketing and Terminalling
Regulatory ⁽³⁾	$	849	$	719
Maintenance ^{(1) (3)}	476		411
Discretionary ⁽³⁾	1,700		1,453
Wholesale marketing and terminalling segment total	$	3,025	$	2,583

Total capital spending ⁽⁴⁾	$	17,576	$	3,028