The fourth quarter also saw an increase in our margins, bringing them back in line with historical averages since our initial public offering. This increase is the result of our steady determination to offset inflationary costs through both productivity improvement and contractual pass-through adjustment. We believe the utilization of both the continued productivity improvement and the continued use of CPIU rate adjustment will continue to support our margins in line with current levels should inflation increase again in the near term. Fourth quarter 2023 net income was $12.8 million, operating income was $68.5 million. Net cash provided by operating activities was $91.6 million and cash interest expense net was $43 million. Cash interest expense increased by approximately $1.6 million on a sequential quarter basis, primarily due to higher average outstanding borrowings on our floating rate credit facility.
However, higher cash interest expense was mitigated by $2.5 million of cash payment received under our $700 million notional principal fixed rate interest rate swap, which we modified and extended in October and now locks in 30-day SOFR until December 2025 at 3.9725% compared to current 30-day SOFR that currently exceeds 5%. Turning to operational results, our total fleet horsepower at the end of the quarter increased by 1% to approximately 3.8 million horsepower as we accepted delivery of 47,500 horsepower on the new large horsepower unit during the quarter. Our revenue-generating horsepower increased by 1% on a sequential-quarter basis, primarily due to the addition of these new large horsepower units. Fourth quarter 2023 expansion capital expenditures were $90.1 million, and our maintenance capital expenditures were $6.6 million.
Expansion capital spending continues to consist of reconfiguration and make ready of idle units, along with the aforementioned delivery of 47,500 horsepower of new large horsepower units during the quarter. We currently expect to take delivery of an additional 52,500 horsepower of new large horsepower units during the first half of 2024, with almost all expected during the first quarter, plus additional and ongoing conversion of current fleet idle units to active status. The new units represent the remainder of our late 2022 order. Additionally, throughout 2024, we anticipate the deployment of between 85,000 and 115,000 horsepower of existing uncontracted fleet assets at capital costs substantially below those of new organic growth equipment builds.
Finally, I am pleased to share that on February 2, we made our 44th consecutive quarterly distribution payment, the $0.525 per unit distribution was flat to the previous quarter’s distribution. And with that, I’ll turn the call back over to Eric Long for concluding remarks.
Eric Long: Thank you, Eric. Our 2023 full year and fourth quarter results again reflect USAC’s commitment and ability to continue delivering meaningful value to our stakeholders. Over the past five years, our total unitholder return has been 236%, beating the S&P 500 of 107% over the same time-period. We are grateful for the value we’ve been able to deliver to our stakeholders. We believe that our near-term reduction in capital growth, while focusing on internal efficiency and optimization will provide USAC greater financial flexibility and our stakeholders a compelling value. While we are all facing some general economic and political uncertainty in the near term, we believe we are well-positioned to weather this uncertainty and continue improving our financial metrics for further capital cost improvement, leverage reductions and distribution policy changes.
To conclude, we are extremely pleased with our 2023 full-year and fourth quarter results, highlighted again by record quarterly revenues, adjusted EBITDA, distributable cash flow and distribution coverage, and which also featured continued improvements to utilization and contract pricing. We expect to file our Form 10-K with the SEC as early as this afternoon. And with that we will open the call to questions.
Operator: [Operator Instructions] The next question comes from the line of Jeremy Tonet with JP Morgan. Your line is open.
Unidentified Analyst: Hi, everyone, this is [Eli] on for Jeremy. Just hoping the team could provide updated color around lead times for Cat engines and overall compression equipment. How should we think about those lead-times dynamics in the near and medium term? Thanks.
Eric Scheller: Hi, Eli, this is Eric Scheller. Lead times for Cat equipment now are exceeding 40 weeks to 45 weeks just to receive the engines. And then you still have packaging time that goes on top of that. We are always talking to customers as they’re looking at their production profiles and checking out what demand is in excess of the current forecast we have for our horsepower.
Eric Long: Eli, this is Eric. I’ll give a little additional color because there’s more than just new engine sourcing from Cat and others. We continue to see supply chain bottlenecks. We’ve got sub-component inventory issues, we’ve got manufacturing issues. So the misnomer that inflation is passed and supply chain problems are fixed, it’s quite the opposite. As we continue to onshore more and more activities, as we continue to have some of these geopolitical conflict escalations worldwide, we see continued pressure on supply chain into the future. So things are not getting better. They roll around. One day it’s a wiring harness, the next day it’s bolts and nuts and gaskets, the next day it’s related to turbochargers or heads and valves and various things that go into keeping our engines running.
So I think that’s one of the differentiators that some of the major players can bring to the table, is long-term stable relationships with manufacturers or other alternative suppliers of equipment so that we can make sure that our equipment continues to run. So I think it’s important for everybody to keep in mind. It’s not just access to new equipment, but it’s making sure you can keep your existing equipment up and operational and running. And trust me, in this environment, it is not an easy task right now.
Unidentified Analyst: Got it. Yes, I totally understand that. And then maybe just if we could pivot to kind of some of the 2024 DCF guidance you guys provided, recognize there might be reduced growth CapEx, you mentioned in the opening remarks, but just wondering if you could dive further into your latest capital allocation prioritization, how should we be thinking about deleveraging, especially as you approach your leverage target versus growth CapEx levels? And then how do kind of equity shareholder returns fit into that thinking about the dividend and what you guys might do with that in the near term?
