MINNEAPOLIS -- Nortech Systems today reported quarterly net income rose 17.5% year-over-year to $276,000, its highest mark in more than two years.

Net sales for the period ended Dec. 31 fell to $25 million from $29.1 million in 2011.

The electronics manufacturing services provider reported operating income rose 4.1% to $485,000.

“We finished 2012 strong – with our highest quarterly income of the year and strongest operating results in more than two years,” said Mike Degen, Nortech Systems’ chief executive officer. Cash flow from operations rose to $5.5 million in 2012, the majority during the fourth quarter.

For the fiscal year ended Dec. 31, the EMS company reported net sales of $106.9 million, down from $114.2 million in fiscal 2011. Operating income was flat at $1.5 million. Net income fell 47.8% to $629,000.

Medical segment sales rose sequentially each quarter in 2012 and year-end backlogs increased 24%. Industrial sales fell due to global economic uncertainty. Defense sales decreased as contractors were cautious about budget negotiations and sequestration. Sequentially, backlogs rose across all three of Nortech’s key markets – medical, industrial and defense.