Command Center Inc. (OTC: CCNI) reported second-quarter revenue fell 4.9% year over year to $21.7 million, driven in large part by a $1.6 million decline, or 42%, at the industrial staffing provider’s branches in North Dakota, a state economically dependent on the health of the oil industry.

The industrial staffing provider in June acquired Hancock Staffing for $2.2 million. Hancock Staffing operated one branch in Little Rock, Ark., and another in Oklahoma City, with combined annualized revenue of approximately $8 million.

Revenue from branches outside North Dakota — and excluding revenue from the Hancock Staffing branches — was unchanged year over year at approximately $19.0 million.

Command Center reported net income of $274,852, down from net income of $530,141 in the second quarter of 2015, which included a $300,000 valuation allowance associated with deposits placed with the company’s former workers’ compensation insurance carrier and a $200,000 reserve for a note issued by Labor Smart Inc.

Gross margin also fell in the second quarter, partially attributable to the reduction in higher-margin revenue from North Dakota, as well as a higher mix of business that did not meet the company’s gross margin target.

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“Overall revenue in the second quarter continued to be pressured by the decline in revenue from our branches in North Dakota’s oil-driven market,” said President and CEO Bubba Sandford. “With revenue from branches outside North Dakota unchanged, several of those offices did not perform to the standards of excellence we demand from the field and everyone in the company. In the end, we just did not perform to the high expectations we set for ourselves as a company.”

Sandford continued, “As a result, we began taking measures in the second quarter and even more recently to improve operations in the field by making several changes. They include personnel changes and eliminating certain positions, as well as an overall flattening of the organization to foster a closer relationship between our branch and corporate-level staff. As we are always looking to manage and reduce costs, we also adjusted costs related to travel and other support items without compromising service to the branches.”

Share price and market cap

Command Center shares fell 2.50% in early afternoon trading today to 39 cents and the company has a market cap of $24.73 million, according to Yahoo.