How can I convert sprite sheet into material

in 0.51 it is not just the tools, the entire dots animation package is not supported.

So to get skinned mesh animation, using the old system might be the easiest way to get something up and running. Technically you are not converting them to entities, you are linking a normal gameobject to an entity. And you are abel to influence this normal gameobject from a system in a easy way.

This framework also has a Skinned Mesh solution. Maybe it can help with your use case, but i have not looked at it myself.