We expect a cumulative adjusted EBITDA to free cash flow conversion of approximately 45% between 2024 and 2028, and expect to generate more than $500 million in free cash flow over this period. Finally, our long-term capital allocation priorities remain the same. Our approach to the use of capital will remain disciplined and thoughtful, allocating dollars to areas that best advance our strategy and maximize shareholder value. Based on the significant value creation opportunities embedded in our plan, the best and highest use of cash remains investing in the long-term organic growth for DFIN. We are targeting average annual CapEx of approximately $60 million from 2024 through 2028 with the near term expected to require more investment, which will then moderate over time as we gain increased scale and efficiencies.
Next, share repurchases and net debt reduction will each continue to occupy the next highest priority for use of cash. Regarding M&A, we do not have any transactions assumed in our plans. While we will continue to evaluate opportunities that could accelerate our strategy, we will maintain the same discipline that we have exhibited historically. And lastly, we view dividends as the lowest priority for use of cash at this time, and as such, do not anticipate any dividend payments. We are committed to executing against our long-term plan and continue to find opportunities to create value for all our stakeholders. We look forward to sharing our progress against our updated projections going forward. With that, I’ll now pass it back to Dan.
Dan Leib: Thanks, Dave. In 2023, we executed well in a very challenging market environment, delivering solid financial results while continuing to invest to become the leading provider of compliance and regulatory solutions. In 2024, you can expect our primary focus to remain on accelerating our business mix shift by continuing to grow our recurring revenue base while maintaining share in our core traditional businesses, including transactions. We will continue to invest in our regulatory and compliance software platform to ready ourselves to capitalize on the demand from future new regulations and non-SEC use cases. In addition, we will continue to aggressively manage our costs and drive operational efficiencies. Finally, we will remain disciplined in the allocation of capital in order to maintain our financial flexibility to execute our strategy.
I am confident that if we do these things well, we will continue to create increased value for our stakeholders, clients, employees and shareholders in 2024 and beyond. Before we open it up for Q&A, I’d like to thank the DFIN employees around the world who ensure our clients continue to receive the highest quality solutions. Now with that, operator, we’re ready for questions.
Operator: Thank you. [Operator Instructions] We’ll go first to Charles Strauzer at CJS Securities.
Charles Strauzer: Hi good morning.
Dan Leib: Morning, Charles.
Charles Strauzer: Given the volatility of the M&A market and the nice growth you showed in Venue, how sustainable is the growth there? And what are the things you’re seeing in the M&A market that you can share with us?
Dave Gardella: Yes, Charlie, thanks for the question. One of the things that we’ve looked at in terms of Venue, it’s not as nearly as volatile as the broader M&A market in terms of completed deals. I think certainly, when you see the number of transactions completed relative to our performance in Venue, a bit of a disconnect there. Even though deals aren’t getting done, it doesn’t mean they’re not getting worked on, et cetera. And the 26% growth that we saw in the quarter, obviously, much, much stronger than the number of deals getting completed. We look at Venue, again, as being more – certainly not recurring like ActiveDisclosure or some of the other Arc, the compliance products, et cetera. But certainly reoccurring and more stable than the balance of the transactional business.
Charles Strauzer: That makes sense, great. Just following up there, too. Can you give us a little bit more color into the assumptions that are kind of baked into your near-term guidance? And how should we think about the range? What’s kind of baked into each, the high/low there?
Dave Gardella: Yes. I think – I assume you’re talking about the first quarter guide. It specifically talked about – in our prepared remarks, the transactional revenue being up pretty significantly relative to last year’s first quarter. Now that said, last year’s first quarter was the low watermark in recent history. And so while we’re seeing a pretty substantial or anticipating a pretty substantial percentage increase, I would say, on an absolute dollar amount, the transactional revenue for the quarter is still expected to be well below historical averages.
Charles Strauzer: Great. And just lastly, when you look at the EBITDA for contribution from TSRs in 2025, how should we think about the margin on that? Is it similar to kind of the historical print margin? Or is it – do you think it’s above that?
Dave Gardella: Yes. I would say above that. When you look at, I think, again, it’s a combination. Our TSR solution is a combination of software, service and print and roughly half of it will be software. The balance spread across traditional services and print as well. I think when you think about it on an incremental margin basis, somewhere in the 40% to 50% range is probably reasonable.
Charles Strauzer: Great. Thank you very much.
Dave Gardella: Thank you.
Operator: We’ll move next to Pete Heckmann at D. A. Davidson.
Pete Heckmann: Great. Thank you for taking the question and I apologize I missed that last question. Forgive me if I’m repeating it. But on the total shareholder, I’m sorry, tailored shareholder reports and your thought process there around the total revenue opportunity for DFIN, I guess, how does that compare to what you consider to be the overall potential from that market? I guess in terms of like, did you get the – are you getting the share or do you believe you’ll get the share that you thought you’re going to get? Or are there other competitive solutions that have proven to be a little bit more competitive than what you have thought?
