Top 40 supplier Delta Apparel (asi/49172) increased net sales 12.5% during it fiscal year first quarter, but experienced a net loss of $1.1 million – or $0.17 per diluted share. The loss was primarily the result of a $2.5 million expense the Greenville, SC-based company incurred to resolve litigation tied to the March 2016 bankruptcy of defunct retailer Sports Authority, executives said.

According to Delta Apparel, total company sales for the first quarter reached $101.7 million, up from $90.3 million in Q1 2018. Sales in the firms’ Delta Group division, which includes business with the promotional products industry and more, were up 12.5%, too. Gross profit – which doesn’t account for the litigation expense – was up 13% year-over-year to $18.6 million.

“This is an exciting time for Delta Apparel and we are extremely optimistic about our prospects going forward,” said CEO Robert W. Humphreys.

Nonetheless, the multi-million dollar litigation expense resulted in Q1 operating income tallying $117,000 – down precipitously from $1.7 million in the prior year. Delta Apparel’s total debt at quarter’s end was $134 million, up $22 million from the end of the 2018 first quarter. The rise in debt was down, in part, to the supplier’s recent digital print acquisitions.

During Delta’s Q1 2019, which ended Dec. 29, 2018, the company spent $1.8 million on capital expenditures, $12 million on the acquisition of SSI Digital Print Services, and $1.7 million to repurchase 92,000 shares of company stock.

With reported 2017 North American promotional product revenue of $46.2 million, Delta Apparel ranked 35th on Counselor’s latest list of the largest suppliers in the industry.