SARATOGA SPRINGS — Saratoga-based Espey Manufacturing & Electronics Corp. announced Wednesday a 53 percent year-over-year gain in net income for its third-quarter despite a drop in sales.

Espey, which designs and produces custom magnetic components and power supplies for military and industrial applications, trades on the American Stock Exchange and has a fiscal year that runs from July to June.

Company officials said Espey had $6.5 million in net sales for the third quarter, down $1.6 million from third-quarter 2007, when it had $8.1 million in sales. Net income for the third quarter increased from $714,030 to $1.1 million. Earnings on a diluted share basis increased 56 percent from 34 cents in third quarter 2007 to 53 cents for third quarter 2008.

“Our improved net income is the result of higher profit margins attributable to certain programs moving from the engineering phase into the production phase,” Espey President and CEO Howard Pinsley said. “These programs, while in the engineering phase, had a negative impact on earnings.”

Total sales order backlog for the company at the end of the third quarter was $33 million, up $900,000 from the same period last year.