Fast forward to today, after year 1 of DN Now and we have met or exceeded on every commitment we made and are on track for future targets.
As shown on Slide 3, we reported total revenue of just over $4.4 billion which was within our initial range, and our results also included substantial currency headwinds of approximately $150 million.
We delivered adjusted EBITDA of $401 million which was within our initial outlook from February of 2019, and which represents a 25% increase over 2018.
And also included a foreign exchange impact of approximately $7 million.
Most importantly, we exceeded our free cash flow target, generating $93 million versus our initial expectation of breakeven.
We increased our non-GAAP gross margin by 280 basis points to 25.2% with strong margin expansion in all three segments and business lines.
Our progress enabled DN to boost its adjusted EBITDA margin by 210 basis points to 9.1%.
Free cash flow increased by $256 million.
And unlevered free cash flow jumped by $315 million reflecting our companywide focus on driving both operating and net working capital efficiencies while delivering these against the backdrop of significantly stronger customer satisfaction levels.
Our progress reduced our leverage ratio by more than a full turn, ending 2019 at 4.4 times.
In Belgium, we won a multiyear ATM-as-a-Service agreement to update and maintain approximately 1,560 ATMs with a joint venture called JoFiCo.
In the retail segment, we increased our retail self-checkout shipments by more than 50% in 2019.
In the fourth quarter, we won a new $6 million contract at the U.S. value retailer for kiosks and dynamic software.
Important wins in the quarter included a $15 million contract with the Swiss gaming cooperative for 5,000 point-of-sale terminals, and a new 3-year $14 million agreement with a European do-it-yourself retailer to refresh the end-to-end customer checkout experience at several hundred stores spanning 12 countries.
For example, we're very encouraged by the broad-based success of our services modernization plan which includes proactively upgrading hardware of software on more than 140,000 terminals and implementing standard practices globally.
In addition, we dramatically improved the efficiency of our inventory levels, collections and payables which added $110 million to our cash flow and our improving performance led to a successful extension of nearly $800 million of credit in August.
Our execution momentum gives us confidence to increase our targeted gross savings from $400 million to $440 million through 2021.
First, the transition to our new operating model is complete and about $100 million of savings have been realized in 2019.
In 2019, we divested or shut down a half a dozen businesses which generated about 2% of revenue.
We successfully reduced the number of ATM terminals by about 30% in 2019, and we have solidified plans to further reduce legacy terminals by about 45% in 2020.
When coupled with changes to our manufacturing footprint and better rigor on contract bids, we expanded our non-GAAP product gross margin by 310 basis points in the quarter to 22% which is a multi-year high for the company.
We have initiated the certification process for DN Series with 240 customers across 35 countries.
Our service renewal rate continue to exceed 95% during the fourth quarter while our contract base of ATMs remained stable at 582,000.
This chart shows our revised contract based figures which exclude about 35,000 units in China, following our reduction in ownership, the strategic alliance as part of our non-core asset divestiture actions.
And as a result, we expect the services contract base to expand modestly to 590,000 by year-end 2020.
Our gross services margin increased 330 basis points versus the prior year to 28.2% in the fourth quarter.
Our momentum underpins our confidence in achieving full-year gross margins of 28% to 29% by 2021.
With respect to our real estate footprint, we reduced our office square footage by about 10% by closing or rightsizing more than 40 locations.
For 2020, our goal is to reduce office space by another 10%, while also implementing more agile workforce practices.
In the fourth quarter, we were pleased to drive non-GAAP SG&A expense to $169 million, our low point for the year.
Excluding the impact from foreign currency headwinds and our divestitures, revenue declined 8.1% to $1.15 billion for the quarter.
Many of you should recall that we reported exceptional strength in our product revenue in the fourth quarter of 2018 which was approximately $50 million more than we would typically expect, resulting in an unfavorable comparison.
And that have been proactively reducing our exposure to lower-margin business which had a fourth-quarter revenue impact of approximately $40 million.
We increased gross margins by 300 basis points to 26.3% which translates to higher gross profit of $3 million.
Higher gross profit, coupled with lower operating expenses, enabled the company to boost operating profit by 20% from $83 million to $100 million.
Correspondingly, our operating margin increased by 230 basis points to 8.7%, while the adjusted EBITDA margin improved 180 basis points to 11.4%.
Return on invested capital was approximately 10% in 2019, much better than our mid-single-digit result in 2018.
Slides 10 through 12 contain segment financials for the fourth quarter and full year.
Excluding currency and divestiture, revenue declined 8.8%.
For the full year, revenue declined 2.4% adjusted for currency, divestitures and other actions.
Operating profit increased by $19 million or 13% to $169 million, and includes foreign currency headwinds of approximately $10 million.
Fourth-quarter revenue declined 1.5% after adjusting for currency headwinds and divestitures.
Operating profit nearly tripled in the quarter from $14 million to $40 million when compared with the prior-year period.
Again, execution of our DN Now initiatives resulted in a 630 basis point expansion of the profit margin to 9.5%.
For the full year, revenue increased 7% excluding the impact of currency divestitures and related actions.
Operating profit increased by more than $100 million to $120 million primarily due to our DN Now initiatives and revenue growth.
Revenue decreased 15% after factoring in currency headwinds and divestitures due primarily to a challenging comparison.
Our fourth-quarter 2018 retail revenue was approximately $50 million or 15% above our quarterly average as we delivered on a number of large POS refresh contracts.
Higher quality revenue and better cost structure from the DN Now initiatives, increased operating profit by 62% to $21 million.
For the full year, retail revenue decreased 2.5%, again, excluding the impact of currency divestitures and related actions.
Operating profit increased by 23% to $58 million as we benefited from a more favorable mix of self-checkout products, higher services gross margins attributable to our services modernization plans and lower operating expenses.
Referencing Slide 13, I am pleased with our team's ability to generate $93 million of free cash flow for the full year of 2019.
On a year-on-year improvement of $256 million demonstrates the broad-based commitment to financial discipline across the company.
The DN Now initiatives were the key to our success as we increase adjusted EBITDA to $401 million and harvested $110 million of net working capital.
To put a finer point on our improvements, the company reduced net working capital as a percentage of revenue by 440 basis points from 18.3% to 13.9%.
Our free cash flow progress is even more impressive, considering that we offset $60 million of incremental interest payments.
Unlevered free cash flow was $275 million, an improvement of $315 million.
For the fourth quarter, the company generated free cash flow of $116 million and unlevered free cash flow of $168 million.
Total liquidity of approximately $770 million includes nearly $388 million of cash plus available credit.
Company ended the year with gross debt of $2.1 billion and net debt of $1.76 billion.
Our leverage ratio continues to improve declining to approximately 4.4 times at year-end.
Over the next few weeks, for our credit agreements, we will use approximately $50 million of our free cash flow to pay down secured debt reducing 2020 interest cost.
Our workforce streamlined finance, personnel and processes which should lead to incremental G&A savings of $30 million in 2020 and another $20 million in 2021.
First, the company finalized the transaction to consolidate its joint venture operations in China with the Inspur Group.
As a result, DN will repatriate approximately $25 million of cash and become a minority shareholder in the combined operations.
Moving from approximately 55% ownership to approximately 48% ownership.
Due to our minority ownership status in the consolidated JV, we will report pro rata profit or loss on the P&L as equity and earnings of unconsolidated subsidiaries, deconsolidating approximately $50 million of future revenue.
In a separate transaction, the company signed a definitive agreement to sell its 68% ownership stake in Portalis to Data Group.
DN will harvest approximately $10 million in cash for 68% interest and will receive relief from future liabilities, including capital and pension obligations while maintaining good relationships with common customers.
During 2019, this business generated revenue of approximately $60 million.
We are expecting revenue will be relatively flat excluding approximately $110 million impact from our recent divestitures and reflecting expected currency fluctuations.
Adjusted EBITDA is expected to be in the range of $430 million to $470 million reflecting approximately $130 million of DN Now savings, plus $25 million for growth initiatives, $10 million of nonrecurring profit from our divestitures, and typical inflation headwinds and other items.
Specifically, we expect to generate approximately 45% of our annual revenue and approximately one-third of adjusted EBITDA during the first half of the year.
Additionally, as Gerrard mentioned, we are working with 240 customers and certifying our DN Series, so it follows the production activity or ramp in the second half of the year.
From a free cash flow perspective, we expect to generate between $100 million and $130 million for 2020, including the following components, an EBITDA midpoint of $450 million and net working capital benefits of approximately $30 million.
Net interest payments of approximately $170 million.
Restructuring cash outflows of approximately $80 million.
Capital expenditure is approximately $70 million which includes certain investments in our internal systems supporting our digital transformation.
And cash taxes and other payments of approximately $45 million.

Summary:
In the fourth quarter, we won a new $6 million contract at the U.S. value retailer for kiosks and dynamic software.
Our execution momentum gives us confidence to increase our targeted gross savings from $400 million to $440 million through 2021.
First, the company finalized the transaction to consolidate its joint venture operations in China with the Inspur Group.
From a free cash flow perspective, we expect to generate between $100 million and $130 million for 2020, including the following components, an EBITDA midpoint of $450 million and net working capital benefits of approximately $30 million.
Capital expenditure is approximately $70 million which includes certain investments in our internal systems supporting our digital transformation.