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Yesterday, Kansas City Southern reported record first-quarter revenue of $607.4 million, up 10 percent, and volume of 535,300 units, up 4 percent, compared with first-quarter 2013 figures.Grain and agricultural products led the way, with grain revenue up 69 percent, said KCS President and Chief Executive Officer David Starling during the Class I's earnings conference Wednesday afternoon."All six commodity groups reported year-over-year revenue gains led by agriculture and minerals, which increased 40 percent [to $113.4 million]," he said. "Later in the first quarter, KCS also recorded higher-than-expected utility coal volumes and revenues as a result of higher natural gas prices, which made coal a more competitive option benefitting certain plants we serve."Led by strong coal and frac sand business, energy revenue increased 2 percent to $78.2 million. Chemical and petroleum, and industrial and consumer products revenue each rose 3 percent, to $105.2 million and $149.1 million, respectively. Meanwhile, intermodal revenue jumped 10 percent to $88 million and automotive revenue climbed 7 percent to $52.4 million.KCS also reported that adjusted Q1 earnings rose 18 percent to $1.05 per share, adjusted operating income climbed 17 percent to $190 million and the adjusted operating ratio dropped 1.8 points to 68.7. The adjustments reflect a $29.9 million cost from an equipment lease that was terminated. KCS' reported operating ratio increased 3.2 points to 73.7.Quarterly operating expenses increased 7 percent to $447.4 million primarily because of slightly higher compensation/benefits, fuel and depreciation costs, said Executive Vice President and Chief Financial Officer Michael Upchurch.Because of projected growth opportunities in many of KCS' business groups, which are expected to carryover into 2015, the Class I has opted to increase the 2014 capital spending budget from 22 percent to 28 percent of total revenue, primarily to purchase new locomotives, said Upchurch.Looking ahead, senior executives are optimistic KCS can remain on a positive growth track throughout the course of 2014, said Starling.“While it is still early in the second quarter, KCS business levels have improved in April," he said. "The indication that our core business appears to be gaining strength provides us with positive momentum towards achieving the 2014 goals we outlined to investors in January.”