Santa Monica manufacturer goes with the flow as automakers increase use of airbags.

Santa Monica manufacturer goes with the flow as automakers increase use of airbags

Every time a General Motors airbag suddenly inflates, Puroflow Inc., a Santa Monica-based manufacturer is put to the test: The company makes a filter which prevents particles and gasses - byproducts of the inflamatory explosion - from entering an airbag, but which still allows the airbag to inflate rapidly. In this case, "rapidly" means within one-fiftieth of one second.

"When the explosion goes off, the is like a hand grenade," said Jerry Pearlman, spokesman and board member at Puroflow. "Our filter catches the shrapnel and hot gasses, so that nothing goes into the airbags that could knock the eyes out (of a driver) or burn a person."

Puroflow, a 27-year-old manufacturer of air, water and fuel filters, is making 20,000 of the airbag filters a week, and plans to soon double production. The filters sell for $5 apiece. GM is the company's main customer, but Ford Motor Corp. and some Japanese companies are also buyers.

GM and Ford have made airbags standard on some models, and optional on others; both companies install airbags that use the Puroflow filter. Chrysler uses a different system that does not make use of the Puroflow filter.

Congress has mandated some form of "passive restrain" on all passenger cars and light trucks by 1994. While some seatbelt systems are in use, "You can pretty much assume the industry is going to go 100 percent airbags," said Robert Harnar, Ford spokesman. This year, about 14.5 million cars and light trucks will be made in the United States.

With airbag filter sales expanding, Puroflow revenues and earnings are up. The publicly held company reported a net of $182,667 on revenues of $2.21 million in latest reported quarter, compared with just $48,991 on $1.67 million in revenues in the year-earlier period.

On a per-share basis, quarterly earnings jumped from 2 cents to 6 cents. "We think earnings will hit 8 cents a share in the next quarter," said Pearlman.

Trading in the $6 a share range, one analyst said that Puroflow stock had risen of late, but still was a buy for investors looking for good long-term value. "There has been a lot of stock market interest in Puroflow, but they have record backlogs and earnings,"' said Joseph DiLillo, chairman of Drake Capital Securities Inc. in Santa Monica. "Between $5 and $7, I think the stock is good for the long-term holder."

Still, investors snapping up the shares of Puroflow won't be buying in on a secret. Three years ago, the company's annual meeting was attended by two or three people not connected to the company, said DiLillo. "But at the last meeting, there must have been 80 people there," he said.

But in the long run, airbags most likely will become standard equipment on automobiles, perhaps not only for the driver but for passengers, said DiLillo. There may be other airbag applications, such as on airplanes, he said.

With about 3 million shares outstanding, Puroflow has a market capitalization of about $18 million.

There is a domestic competitor to Puroflow in the manufacture of airbag filters, but no foreign competition. Pearlman said he believes that foreign competition may be a long time coming, if at all. "We not only manufacture the airbag filters, we make the machines that make the filters," he said. "I believe it would take the Japanese five to 10 years to make these filters."

Puroflow also manufactures a variety of air, water and fuel filters used in the aircraft industry, and a patented ultraviolet purification unit for water, used by small municipalities.

The ultraviolet purifier - which kills bacteria and other germs - may have a bright future as more small cities look askance at chlorine and other chemical treatments of water, said analyst DiLillo.